Advanced sales and VAT registration threshold

Advanced sales and VAT registration threshold

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The sole trader provides services to local authorities. At this time of year local authorities often ask to be invoiced pre 31 March for work that won't be started until post 1 April (using up the year's budget).
If the trader was VAT registered, the tax point is presumably the date of invoice ?
If the trader is not registered, is this still the case when determining the registration threshold, or can the invoice be treated as 'invoiced in advance'and ommited from the calculation?
David Evans

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By AnonymousUser
01st Mar 2002 13:05

Philippa is right.....
I must agree with my erstwhile but nevertheless esteemed colleague on this one. Tax point for VAT reg entity here will be the date of issue of invoice, assuming it is a VAT invoice.

BUT, why cant the trader issue a "request for payment", headed "this is not a VAT invoice"? If he/she does this, then tax point not advanced. If payment is made, then tax point advanced to that date. Could be a solution, especially when the sole trader would be out of pocket of the VAT charged to the LA on the straight VAT invoicing route.

Why not cash accounting?????? t/o should be well within the limits?

For the unregistered guys, then they are in a worse position. They will be caught on the registration rules for invoices, even though they cannot raise a VAT invoice.

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By rkillington
26th Feb 2002 20:22

VAT registration limit
The registration rules in Sch 1 of VATA94 refer to the *value* of taxable supplies made in a 12 month period. A taxable supply is defined in s4(2) as a supply of goods or services, other than an exempt supply.

So, has a supply been made? If so, the value of that supply is included in the total for determining VAT registration. I think it reasonable to argue that the supply has not been made, even though an invoice has been raised. The invoice raised is not a VAT invoice as the business is not registered for VAT, so doesn't of itself appear to create a time of supply.

Robert Killington

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By AnonymousUser
22nd Feb 2002 17:04

Time of supply
S. 6 (3) of the VAT Act, 1994 specifies that the time of supply for a service is when the service is supplied. However, S. 6(4) of the VAT Act provides that the if an invoice is issued prior to the actual performance of the service, the time of supply would be the time when the invoice was issued.

With reference to the calculation of taxable supplies for threshold purposes, S. 3, Schedule 1 of the VAT Act must be read along with S. 6 of the VAT Act to determine the value of taxable supplies for the threshold purposes.

This would clearly make you liable for registration. So you may not be able to omit this transaction from the calculation for your threshold requirement.

If you have crossed the registration threshold, you must start keeping records and charge VAT to your customers from the date you hit the threshold and have to be registered.

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By AnonymousUser
25th Feb 2002 09:47

Cash basis?
I believe it may be impossible to calculate turnover for registration purposes on the basis of invoices issued.

The legislation I believe says that a taxpoint arises on issue of a TAX INVOICE or receipt of payment. A non-registered taxpayer cannot issue a tax invoice unless registered, therefore the registration limit is calculated strictly on a cash basis.

I believe this point is accepted by Customs, and it may be worthwhile discussing this with Customs. My advice is to do this before submitting a VAT 1.

For a registered taxpayer, I believe a taxpoint arises on issue of a tax invoice, if in respect of a taxable supply (not zero rated or exempt)

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