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Am i out of pocket?

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I charge a customer say £1000 plus vat but said customer charges us for his services £1000 but no vat as not vat registered - am i not therefore £200 "down" due to paying the vat?  My accountant says not but i dont understand how i cant be.  

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By spidersong
25th Nov 2019 15:32

It's because you don't pay the VAT your customer does.

If you want to charge out £1000 of work then your invoice once VAT registered would be £1200 being £1000 of work plus £200 VAT charged.

If you were to contra out a charge from a non-VAT registered party for £1000 of their work then they'd still be sending you £200 (£1200 of your invoice less the £1000 on theirs) which is what you use to pay the VAT man.

Your bank balance after it all is unchanged.

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By Andywho is fed up
25th Nov 2019 15:33

Exactly how do you think you are "down" on these transactions?

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By lionofludesch
25th Nov 2019 15:40

You're not collecting the £200, are you, Sharon ?

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By Sharon Street
25th Nov 2019 15:47

I get it now, sorry, being bit slow! The invoice/bill in/out were supposed to match so in my head that balanced vat payable/vat received but of-course if i dont pay it in the first place that £200 pays my vat bill. Duh!

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Replying to Sharon Street:
By memyself-eye
25th Nov 2019 15:57

Always wondered how this VAT stuff works!

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