Raising invoices before a VAT no's been issued

System
System Posts: 100,534 🤖 Admin 🤖
edited June 18 in AAT member discussion
Am I right in thinking that where you should be charging VAT but are still waiting for your VAT reg number you should continue to raise invoices without VAT on them, but make a note on the invoice that a 'VAT only' invoice will be raised once a VAT number has been issued? I'm 99% sure that's the case, but can't find anything to confirm it.

please help!

Comments

  • System
    System Posts: 100,534 🤖 Admin 🤖
    Re:Raising invoices before a VAT no's been issued

    You have to charge VAT at whatever time you put on the registration form.

    So if you haven't yet received your number you should still charge the VAT.... I advice my clients to put:

    VAT reg no: T.B.A

    Then if the person receiving the invoices wants the registration number it can be supplied once received and Customs haven't lost any OUTUT TAX.

    Regards

    Dean
  • System
    System Posts: 100,534 🤖 Admin 🤖
    Re:Raising invoices before a VAT no's been issued

    Yes - you need to account for VAT on your sales invoices from the date you put on your registration form.

    It is then up to the customer to ask you for a "proper" VAT invoice with the number, if they want to - as if :wink:

    Claudia
  • System
    System Posts: 100,534 🤖 Admin 🤖
    Re:Raising invoices before a VAT no's been issued

    I advise clients to do as Dean has suggested.

    Michelle
  • System
    System Posts: 100,534 🤖 Admin 🤖
    Re:Raising invoices before a VAT no's been issued

    Thanks dean, (and everyone else who's replied in teh mean time!)
    I've actually just done what I should have done to start with, and phoned the VAT helpline as the client in question was told by a solicitor that it's illegal to issue a VAT invoice without a VAT number, so I wanted to be doubly sure I've got this one right!
    The lady on the helpline said (and this does actually make sense!) that until you've got your number you should put 'VAT number pending' on the invoice, the value of the invoice should include the VAT charged, but you may not show the rate or the amount of VAT charged . Once you get your number you can send revised invoices to your customers with full details on so that they can claim the VAT back, if need be.

    jodie
  • System
    System Posts: 100,534 🤖 Admin 🤖
    Re:Raising invoices before a VAT no's been issued

    Absolutely right Jodie.


  • System
    System Posts: 100,534 🤖 Admin 🤖
    Re:Raising invoices before a VAT no's been issued

    Thanks for that Jodie.

    Although I think that is terrible!

    The way I see that is this...

    ABC - VAT registered
    XYZ - about to register (so has to include VAT in it's gross total without showing it!)

    XYZ normally issue's an invoice to ABC for £100.

    ... a few months later

    XYZ issue's another invoice to ABC for £117.50 gross (as he has done in the past).

    ABC thinks well XYZ's fee have increased... pays the bill and though no more about it.

    XYZ pays across the £17.50 to Customs (who are happy!)

    ABC doesn't know to RECLAIM the £17.50 they have been charged.(Customs extremely happy!)

    Although the rule book may say that this is the STRICT position I shall continue to give the advice I have been. I feel this is pulling the wool of the tax payers eyes!

    My clients will make the taxable supply when they should and they'll also keep their customers happy!

    After all, the newly registered person can re-issue there invoice and the customer can still reclaim it at that point!

    Wasn't the Flat rate scheme introduced to reduce ADMIN!

    :twisted:

    Working together pppfffttttt!

    Regards

    Dean
  • System
    System Posts: 100,534 🤖 Admin 🤖
    Re:Raising invoices before a VAT no's been issued

    The drawback to your method Dean, is this..

    XYZ invoices ABC £100, waits for registration number, sends out an invoice for the VAT 6 weeks later, ABC says "What's this rubbish?, we settled that invoice 6 weeks ago go take a running jump"

    Letters go back and forth, XYZ explains "Sorry, was supposed to charge VAT on that invoice, you can reclaim it you know?"

    ABC says "Ok, I'll pay you when I claim it back at the end of my next VAT quarter"

    Not the ideal solution.

    All XYZ had to do was be upfront with ABC and say "I'm waiting for my VAT number, here's the full amount you need to pay me of £117.50. As soon as I get my VAT number I'll let you have a newinvoice so you can reclaim the VAT"

    It's good to talk!!
  • System
    System Posts: 100,534 🤖 Admin 🤖
    Re:Raising invoices before a VAT no's been issued

    That is exactly my point!

    Business people don't want to be messing around with invoices.

    It causes more confusion that it's worth. The rule books don't always work in 'practice'.

    How many people (lay people) do you know that would know and understand that?

    Ok thats what we're here for but what i'm getting at is if we advice the correct procedure to our client and he goes to his/her customers and implement our advice. They will see (in this case) ABC as incompontant (making a hash of stuff (reissuing invoices etc)).

    Customs have over complicated an issue that really doesn't need over complicating!

    Regards

    Dean
  • System
    System Posts: 100,534 🤖 Admin 🤖
    Re:Raising invoices before a VAT no's been issued

    I totally see your point dean, but i'm going to play it safe on this one, there's not many invoices concerned but they're all rather large so i'll send out a letter explaining the situation with each one and hope that the people on the other end have a few spare brain cells to cope with it!
    It's for a new client & I'm doing all the invoicing, credit control and trying to find out where the original VAT application has ended up, so hopefully with just me dealing with it all there's not too many wire to get crossed.
    If it was a straight forward new application which i knew would be hassle-free i'd be inclined to do as you do.

    Thanks for your opinions :)
  • System
    System Posts: 100,534 🤖 Admin 🤖
    Re:Raising invoices before a VAT no's been issued

    I think you are doing the right thing Jodie.

    A covering letter stating very simply that the VAT number is pending and a VAT invoice will be issued in due course will be fine.


    Moving off topic: I notice you phoned the VAT helpline. I would always use our free Croner Consulting Business Support line for any technical advice. Not saying I don't trust the Revenue's helplines..

    ..well.. maybe I am!


    :wink:
  • System
    System Posts: 100,534 🤖 Admin 🤖
    Re:Raising invoices before a VAT no's been issued

    Sorry - have we got two Dean's here?

    How confusing :wink:

    Claudia
  • System
    System Posts: 100,534 🤖 Admin 🤖
    Re:Raising invoices before a VAT no's been issued

    I had to phone our own helpline the other day, funny enough that was a VAT query.
    The person I spoke to was extremely helpful and it was much better than ringing the National Advice Line :wink:

    Michelle
  • System
    System Posts: 100,534 🤖 Admin 🤖
    Re:Raising invoices before a VAT no's been issued
    claudialowe wrote:
    Sorry - have we got two Dean's here?

    Apparently..

    Or perhaps it's just my alter-ego!

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