Pro Forma Invoicing

Clarity

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Hi, 

I wondered if someone could clarify the following:

We Invoice our client 100% for goods before they are despatched, once we receive payment we despatch the goods. 

My original thought was the Invoice should be sent out as a Pro Forma Invoice, then we should send a VAT invoice to the customer once it had been despatched. 

However after reading the VAT Record keeping guidance on GOV.UK it states:

SITUATION: Payment or Invoice in advance of supply

TAX POINT: Date of payment of invoice (Whichever is earlier)

This suggests to me that the invoice we send out in the first place can be treated as the VAT invoice & therefore i don't have to send out a 2nd document once the goods have been despatched. 

Could anyone clarify this situation as prefrably would rather send just the one document to the client.

Thanks in Advance

Replies (3)

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RLI
By lionofludesch
30th Jun 2016 10:25

Pro formas are generally sent out where there is some doubt as to whether the sale is to be made. They say "this is what it'll cost - get back to us if you want one."

If you send out an invoice, that would normally create a tax point, which would bring it forward a few days from the date of payment. More often than not, it would be in the same tax quarter anyway so no harm done. Occasionally, it might mean you paying the VAT three months earlier. If the sale is never made, you can always cancel the invoice with a credit note.

Obviously, up to you whether this possible timing disadvantage is worth the saving in paperwork.

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By landscaper
30th Jun 2016 10:50

As an "end" user of pro-formas - please just send out the VAT invoice in the first place! I spend so much time requesting VAT invoices, sometimes up to 3 months after payment; it drives me mad. So many suppliers (that we deal with) want to use them but insist they cannot issue the VAT invoice until goods are despatched no matter how I argue the case. Then the remainder just can't seem to get to grips with actually issuing the invoice - the cynic in me assumes it's to postpone the sale to another VAT quarter but the reality is more likely that they just don't understand why I'd really like the proper documentation in place especially when they are often in the thousands of pounds!

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Replying to landscaper:
RLI
By lionofludesch
30th Jun 2016 11:06

Try asking the supplier if they would like you to invite HMRC to act as arbiter in your documentation dispute. Often the missing paperwork appears by magic.

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