Hi Sirs
I am registered for VAT from the 01/09/2015. I own an accounting practice and my clients pay me monthly. I have already told them that their cost will increase by 20% from the above date. However a few of them do not want to pay me the VAT. I was reading that the tax point of an invoice is the earlier of:
Invoice date and
Payment date
So if I issue the whole year invoice as on the 31/08/2015 and they choose to pay me monthly then is that OK?
For example if someone pays me £100 a month. I can issue him a invoice £1200 as on 31/08/2015 and they can continue pay me £100 a month.
Would it cause me any problems. Will the payments treated as with or without VAT for VAT return purposes?
Please clarify.
Thanks for your help.
Replies (4)
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Hi, for continuous supplies of services, paid for periodically, are charged to tax on the earlier of receipt of payment and issue of each tax invoice - unless one invoice is issued in advance for periodic payments covering a period of up to a year, when the tax point becomes the earlier of each due date or the date of actual payment. For a single supply of a service the tax point is when the service is completed or when it is paid for if earlier.
In addition to the above, it is not a long term solution anyway, is it? What would you do next year?
Did you say that you own an accounting practice? Perhaps one of the accountants / tax advisors can help?