Laptop
Stay Updated & Subscribe To Our Newsletter

Be the first to know about our regular updates, latest resources and news. To receive our great newsletter all you need to do is enter your details and submit !

 

Sage
Bookkeepping
Training

Learn More Small

Services

Learn More Small

IHT & Estate
Planing

Learn More Small

Tax
Planning

Learn More Small

VAT registration - delays

Newsletter issue - July 2021

Due to COVID19, some businesses are experiencing long delays in obtaining a VAT number after submitting the registration form. HMRC acknowledged the delays earlier this year and have asked businesses to be patient whilst the backlog is worked through. However, a business that is new to VAT may be confused about what they need to do in the interim.

Strictly speaking, if a business is registering due to exceeding the historic twelve-month turnover threshold it must start charging VAT from the first day of the second month after exceeding that threshold. For example, if the management accounts for June 2021 show that sales have exceeded £85,000 in the previous 12 months the VAT registration date will be 1 August and the business must start charging VAT from that date. The problem is without a VAT number, the business cannot raise a valid VAT invoice.

One option would be to wait until the VAT number is received, however this could cause serious cash flow problems - some businesses have experienced delays of up to four months.

A second option would be to invoice for the full amount, but not to show the VAT as a separate line on the invoice. If this option is chosen, the total including the VAT should be shown as a single amount, and it should be made clear that a VAT invoice will be issued once the VAT number is received. The problem is that where the customer is also VAT registered, they may be reluctant to accept an invoice that is not a valid VAT invoice as they will be unable to reclaim the input tax.

A third option would therefore be for the business to invoice for the net amount now, and then send the VAT-only invoice later on once the number has been issued. It is advisable for businesses to discuss this upfront with customers to avoid any conflict.

 

Charities & Not For Profit

We have been providing charity clients with high quality, specialist advice and service for many years, and our charity clients range from small village halls to large national organisations...

Learn More Small

Farming Industry

The largest industry sector that we deal with is farming, as you would expect in a rural practice. This means that we have developed considerable expertise in this field...

Learn More Small

 

Back to the top