Having a confusing moment which I would love to clarify please.
My client is registered under the flat rate VAT scheme. There is a sales invoice which was for the last week of the accounting year-end, but was dated and raised after the year-end. My confusion is how do I account for the work in progress. For example purposes, the invoice is £1000 NET +£200 VAT = £1200 Gross 12% Flat rate = £144.00. I have muddled myself into 3 options (sometimes over thinking on your own isn't helpful!)-
1. Value it at the NET invoice amount £1000 (This would seem correct when applying the VAT rule about the VAT being applicable on the date of the invoice, which would be regardless of the VAT scheme)
2. Value it at the Gross invoice amount less Flat rate VAT due £1200 - £144 = £1056
3. Value it at the Gross invoice amount £1200
I appreciate any comments in advance. Thank you.
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Replies (4)
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It goes into the period in which the tax point falls. Was the invoice issued within 14 days of services having been provided or goods being sold? If yes, then the tax point is the date of invoice, and the VAT goes on the next return. I assume you are not talking about 'continous supplies'?
EDIT: - I thought you were questioning what goes on the VAT return. Hence, I misread the question totally!
Option 2
Making some assumptions I'd go for option 2. That reflects what the client ultimately receives in respect of that work & is what would be included if the invoice date had been pre year end.
Also I'd probably be including it as accrued income.rather than WIP.
Indeed
S.A.V. and W.I.P. is ALWAYS valued ex VAT.
Agree - should be exc VAT. As should your turnover.
See earlier debates.