VAT on a proforma invoice

WinnieTiggerEeyore
Registered Posts: 3
The company I work for has received a proforma invoice which gives a net, VAT and gross value. The document states that it is not a VAT invoice and that a VAT invoice will be issued on receipt of payment.
Is this the correct way to issue a proforma invoice? Should we not hold off paying the VAT until we actually get the VAT invoice, or can the VAT be paid in advance?
This is the first time we have received a proforma with the VAT on. Previous suppliers have issued proforma invoices without the VAT, so we have paid the net amount and then paid the VAT once the VAT invoice arrives.
Many thanks.
Is this the correct way to issue a proforma invoice? Should we not hold off paying the VAT until we actually get the VAT invoice, or can the VAT be paid in advance?
This is the first time we have received a proforma with the VAT on. Previous suppliers have issued proforma invoices without the VAT, so we have paid the net amount and then paid the VAT once the VAT invoice arrives.
Many thanks.
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Best Answer
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Hi WinnieTriggerEeyore,
The pro-forma you have received sounds correct. Proformas are like quotes and indicate a cost for goods/services and usually include the VAT element (if the company is VAT registered). Some companies insist on a proforma invoice before shipping goods/supplying services to a customer (i.e. you do not have a credit account, or maybe a your first order from this supplier). A pro-forma is essentially a 'Request for payment notice'.
A VAT invoice must be issued post dispatch of the goods/supply of services. VAT is not reclaimable by the company until the correct invoice/taxdate has been issued by the seller.
Hope this helps.MAAT, AATQB, FIAB, MICB PM.Dip.
Completed AAT in March 2020
Currently Studying: CIMA 'Operational Level'6
Answers
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In my experience a pro-forma invoice is viewed a little like a payment on account. Adjustments are then made to take account of the VAT on receipt of the VAT invoice/receipt. Hotels tend to use a pro-forma process for advance bookings.0