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Late supplier invoices after VAT return period

Late supplier invoices after VAT return period

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We are currently set up to file our VAT returns quarterly but there are occassions where we receive some late purchase invoices out of the blue by other departments within the company

Sometimes these invoices have a tax point which would have been part of a previous VAT return but has since been filed

Of course we book these into the system with the current GL date and an invoice date that matches up with physical suppliers invoice

As a result the VAT recovery debit entry will be entered into this accounting period

Is it ok for this recovery to be part of the input VAT in the following quarter amongst all the other data for the quarter or do we need to seperate it out? (bearing in mind its a self-calculated tax and so is only for our evidence and for HMRC if they were to check)

Is there anything we need to declare to HMRC?

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By paul.benny
21st Oct 2019 16:58

HMRC might tut were they to inspect but your late recovery of input tax is very low on their priorities.

As a company, your cashflow is impaired by delayed recovery of the input tax but you still have to pay the suppliers on time. I think you need to have a word with the people who are hoarding invoices. If you've missed the return, they must have been holding on to them for 3-4 weeks.

There is the wider question of why invoices aren't coming directly to the finance department (stops anyone hoarding them). Perhaps you should be insisting that all expenditure requires a formal order in advance (not one raised at the time the invoice lands).

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Replying to paul.benny:
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By Newbie19
22nd Oct 2019 11:48

paul.benny wrote:

HMRC might tut were they to inspect but your late recovery of input tax is very low on their priorities.

As a company, your cashflow is impaired by delayed recovery of the input tax but you still have to pay the suppliers on time. I think you need to have a word with the people who are hoarding invoices. If you've missed the return, they must have been holding on to them for 3-4 weeks.

There is the wider question of why invoices aren't coming directly to the finance department (stops anyone hoarding them). Perhaps you should be insisting that all expenditure requires a formal order in advance (not one raised at the time the invoice lands).

I agree, with the late recovery it really only affects the company with cash flow more than anything else really

The reason they are not passed directly to the finance company is because they have to go through an internal approval by the person/department responsible for the expenditure before it is paid

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Replying to Newbie19:
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By paul.benny
22nd Oct 2019 13:11

Invoices should still come to finance first to be recorded as a liability. It depends on your systems - some will let you record invoices with an 'unapproved' status - so they can't be paid before sign-off.

Better still, if orders are raised, receipting against the order when the goods/services are received creates a GRNI* accrual and you only then have to match the invoice against the acctual. If you have proper approval processes for orders, it shouldn't be necessary to have separate approval of invoices.

(*Good Received Not Invoices. In SAP, the initials are GRIR)

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Replying to paul.benny:
Hallerud at Easter
By DJKL
22nd Oct 2019 13:31

Have always believed invoice approval is shutting the stable door after the horse has bolted, your sentiments re it are where I would be, approval surely has to be at the order stage otherwise there is really only limited control.

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By Wanderer
21st Oct 2019 17:14

Newbie19 wrote:

Is it ok for this recovery to be part of the input VAT in the following quarter amongst all the other data for the quarter or do we need to seperate it out? (bearing in mind its a self-calculated tax and so is only for our evidence and for HMRC if they were to check)

Is there anything we need to declare to HMRC?

Depends, is the amount of VAT involved
a) under or over £10,000?
b) under or over £50,000?
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Replying to Wanderer:
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By Newbie19
22nd Oct 2019 11:49

Under £10,000...

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By the_drookit_dug
22nd Oct 2019 11:19

Your entitlement to recover input VAT arises upon receipt of the VAT invoice, therefore if you receive an invoice late from the supplier, it's not actually an error to claim it if it's in a later period than the tax point stated on the invoice.

See 'How and when input tax can be claimed' at https://www.gov.uk/hmrc-internal-manuals/vat-input-tax/vit11500#IDAS4X1H

If, however, you have a tax invoice but for whatever reason claim input VAT in a later period, then it's an error.

I would view invoices being sat on by other departments but received in good time from the suppliers as the latter.

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Replying to the_drookit_dug:
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By Newbie19
22nd Oct 2019 11:58

Thanks for the link! That section makes complete sense!

When it comes to quarter end (in line with our quarterly vat period) we perform a sweep across all departments to ensure that we have booked and accounted for all invoices that have been received

Therefore based on this it wouldn't class these as errors but purely timing differences as we are not in receipt of invoices at the time of the VAT return

Thank you all for your help!

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