Per registration VAT

Per registration VAT

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A new client formed a limited company after having traded as a sole trader for a number of years. Whilst a sole trader he never registered for vat as he never went past the thresholds. However whilst operating the limited company his business did well and he went past the threshold in oct 2011. I registered him for VAT in Jan 2012 after being ppointed, telling Hmrc that the threshold was exceeded in October but they sent a VAT certificate effective from 1 Dec 2011. This only came through in Jan 2012.

I have two questions:
1. Does the client have to account for vat on sales between Oct and Dec?
2. Obviously the client continued issuing invoices in Dec and Jan before the certificate came through - how is vat calculated on these? If the client issued an invoice for £100 does he now owe HMRC £20 or £100*1/6=£16.67?

Thanks in advance.

Replies (4)

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By User deleted
01st Mar 2012 08:56

Fairly straightforward

1. No, he doesn't have to account for VAT on any sales prior to 1 Dec 11.

2. From 1 Dec 11, client should have issued gross invoices (including, but not specifying, the VAT amount) marked as "this is not a VAT invoice, registration has been applied for", and then issued VAT invoices once registered. But of course that's easy to say with hindsight, given that the requirement to register was not identified until after the event.

In this case, if your client is able to send out a further invoice for the VAT (£20 in your example) he should do so, and pass this over to HMRC. If he is unable to raise a further invoice to his customer then he will need to absorb the VAT - £16.67 as you correctly point out.

Thanks (2)
Replying to lionofludesch:
Quack
By Constantly Confused
01st Mar 2012 09:18

Agreed

Just to echo BKD, they have pretty much put exactly what I was going to put (which is reassuring for me :) ). 

Can I also add, the client may be able to claim VAT paid in the 4 years/6 months before registration back from HMRC, have a read of http://www.hmrc.gov.uk/vat/start/register/purchases-before.htm

 

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By cyrynpen
13th Mar 2012 09:38

Pre-Registration

Quick question since you've mentioned pre-registration VAT claim. Do you have to claim this on your first return or can I claim it on the next return?

The reason I'm asking is that the client has provided me all the invoices to be able to fully work out the pre-registration claim.

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By david5541
13th Mar 2012 11:04

vat 652

although its not necessary to use this form the rules do allow you to a) either make a correction in a later vat period which I think is a mistake as it will distort current quarter reporting of vat

b) file a correction for the first quarter using the VAT 652

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