Future dated invoices

Is this okay?

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I've been asked if it's okay to raise an invoice dated 1 March 2021 for payment on that date, regarding services to be supplied for the quarter 1/3/21 to 31/5/21.

TBH, in my entire 20 year accountancy career I can't say I've ever really been asked that question! Seems like it shouldn't be an issue, but should I should view it as dodgy?

Replies (5)

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By Paul Crowley
18th Jan 2021 13:05

I suspect it is a tax point issue
When do they want to claim the VAT?

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Replying to Paul Crowley:
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By Silvery Waves
18th Jan 2021 13:23

The customer isn't fussed about when they claim the VAT, but would just prefer purchases relating to their next financial year (Y/E 28 February 2021) in that year as much as possible to avoid fafting about with prepayments.

Other option would be to simply wait until 1 March 2021 - no payment will be made nor services delivered before then. No tax point issue unless tax point brought forward by date of invoice.

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VAT
By Jason Croke
18th Jan 2021 13:21

Wonder if the customer has budget for the expenditure in this financial year but not next year and so an invoice issued today, dated March and paid March would allow customer to buy the services this year, but receive them next year.

For services, the tax point for VAT is date invoice is issued or payment received, presumably the services are a kind that fall under the "continuous supply of services rule" if so, then I don't see problem with a March invoice paid in March for services being delivered in April or May.

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By tom123
18th Jan 2021 14:03

The services are not being supplied until March, so unless you normally expect payment in advance I don't see an issue.

I usually err on the side of whatever assists the customers in paying me smoothly...

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By the_drookit_dug
18th Jan 2021 14:27

The VAT Act 1994 Section 6 Para 4 states:

"If, before the time applicable under subsection (2) or (3) above, the person making the supply issues a VAT invoice in respect of it or if, before the time applicable under subsection (2)(a) or (b) or (3) above, he receives a payment in respect of it, the supply shall, to the extent covered by the invoice or payment, be treated as taking place at THE TIME THE INVOICE IS ISSUED or the payment is received."

(My capitalisation)

So issuing an invoice in advance brings forward the tax point, irrespective of the date of the invoice.

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