VAT Treatment of Supplies

totleyblade

Before I ask the VAT office for guidance on this one I wondered if anybody could give me their thoughts please.
An architect has provided services on and off in respect of a large and complicated project over a period of eight years having agreed with their client that the substantial fee for the services would be charged on its completion, November 2009.
Funds were not available at that time but are due to be released anytime now.
No invoices have been raised in the past.
The client cannot claim back the VAT and is asking for the fee to be invoiced at the rate in force at November 2009, 15%.
Whilst the architect wants to assist their client they could compromise their own situation as I'm certain questions will be asked due to the amounts involved, especially if the VAT does not match the current 20% rate.
I'm not sure about this and my gut instinct is to approach the VAT office to obtain guidance before the declaration is made.
Does anybody have any advise?

janwal

totleyblade wrote: »

Before I ask the VAT office for guidance on this one I wondered if anybody could give me their thoughts please.
An architect has provided services on and off in respect of a large and complicated project over a period of eight years having agreed with their client that the substantial fee for the services would be charged on its completion, November 2009.
Funds were not available at that time but are due to be released anytime now.
No invoices have been raised in the past.
The client cannot claim back the VAT and is asking for the fee to be invoiced at the rate in force at November 2009, 15%.
Whilst the architect wants to assist their client they could compromise their own situation as I'm certain questions will be asked due to the amounts involved, especially if the VAT does not match the current 20% rate.
I'm not sure about this and my gut instinct is to approach the VAT office to obtain guidance before the declaration is made.
Does anybody have any advise?

We have ongoing projects that started a couple of years ago and if the work was carried out prior to a VAT change in rate we have insisted on only paying the vat rate in force at the time unless we could claim 100% back. We did check with our VAT officer first and he said it is acceptable to demand the correct rate of vat if not reclaimable, but if reclaimable it doesn't matter.

Don't know if this helps!

Jan

Newbie

Extract from vat guidance below
If you started work on a job before 1 January 2011 but finished afterwards you may account for the work done up to 31 December 2010 at 17.5 per cent and the remainder at 20 per cent. If you choose to do this you will have to be able to demonstrate that the apportionment is fair.

Monsoon

Go back to basics?

What is the tax point of the transaction?

On the face of it, it's 2009, which gives it a rate of 15%. It's just a very aged debt. The income should have been recorded as an accrual in both sets of books and an invoice should have been raised.

The basic tax point of a transaction is the date the work is completed. If it's invoiced up to 14 days later then that can be taken as the actual tax point but if it's invoiced more than 14 days after (and there's no agreement with HMRC for 30 day invoicing) then the basic tax point of when the work was delivered becomes the actual tax point.

So, I would call it 15%. I can't conceive that there is a robust argument for 20%.