Recovering vat on a deposit

How do I handle claiming vat on a deposit for a supply of goods when the inv date falls on next pd

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Hi all,

Ive got a scenario, I'd like some advice on.

 If I have an invoice for 2500 and I've paid a part payment of £500 towards the invoice balance. The date of the invoice is 10 July 2021 but I've paid the deposit on 10th June 2021. The end of my vat accounting period is June 2021, so my next vat period is September 2021. Does the fact that I've paid the £500 early create a tax point where I can claim the full vat amount.of £416.67 on the invoice on the June 2021 return or do I just claim vat of £83.33 on the £500 part payment and then claim the remainder of £333.34 according to the invoice date of 10 July 2021 on my September 2021 return.

I'll be accounting for vat an accural basis.

 

Replies (5)

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By the_drookit_dug
12th Aug 2021 23:05

You don't claim anything without a valid VAT invoice.

If you've paid a deposit of £500 on 10 June 2021, that will create a tax point for the business you paid it to, so they should have no.problem issuing a VAT invoice for the £500, which will allow you to claim the £83.33. They may be prepared to invoice the full amount of £2,500 inc VAT, but bear in mind you'll have to repay VAT if the full invoice isn't settled within 6 months.

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Replying to the_drookit_dug:
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By MarkT7300000
12th Aug 2021 23:50

So, if I was the seller, the deposit would create a tax point for me, which I'd have to declare the £83.33 vat on gross amount of £500 that I've received.
But then I'd have to declare the remainder of £416.67 vat due when I've raised the invoice on 10 July 2021.

I thought it would be the same those claiming vat, as long as you can prove a supply is taking place.

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Replying to MarkT7300000:
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By rmillaree
13th Aug 2021 09:22

"I thought it would be the same those claiming vat, as long as you can prove a supply is taking place."

This is exactly the correct treatment , as long as you are confident the supply is subject to vat claim input vat at the time of payment - the vat point exists at this date.

It's only really an issue ref "vat invoice" if this doesnt then turn up at a later date - thankfully you don't need to have a vat invoice ahead of the vat invoice existing !- hmrc aree well aware the invoice will be dated later and that is not a problem.

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Replying to rmillaree:
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By MarkT7300000
13th Aug 2021 20:46

rmillaree wrote:

"I thought it would be the same those claiming vat, as long as you can prove a supply is taking place."

This is exactly the correct treatment , as long as you are confident the supply is subject to vat claim input vat at the time of payment - the vat point exists at this date.

It's only really an issue ref "vat invoice" if this doesnt then turn up at a later date - thankfully you don't need to have a vat invoice ahead of the vat invoice existing !- hmrc aree well aware the invoice will be dated later and that is not a problem.

So under these circumstances, if the deposit was paid in the tax period (06/21) prior to the tax period on which the inv date falls (09/21), should the buyer just claim the vat portion for the deposit paid on 06/21 and then claim the balance of the vat charged on the inv in 09/21.

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Routemaster image
By tom123
13th Aug 2021 08:47

How are people managing to get others to pay deposits / or agreeing to release funds without having proper invoices..

If you are the buyer - request an invoice.
If you are the seller - raise one..

Anything else is avoidance..

(yes, I know there are rules etc, but proper businesses just do this anyway :)

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