Vat - change of method

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Hi all - I have a small limited company using the FRS for VAT. Untill now I been filing VAT returns based on invoice date but due to a change in part of my business i am now in a situation that the 'cash based turnover' method might be more apporopriate. This is due to the fact that I have some income collected for me by a third party distributor in the states. The money is available for me to withdraw form them on the date they report sales figures - which in essence is the date of invoice. But due to fees involved I rather withdraw the money once or twice a year and because of flactuating exchange rates figures on the day of withdraw do not match figures reported on invoice date. 

I was advised by VAT helpline that change of method is something i do within my accounts - not something I have to register with them - is that right? is it a question of just me filing my next return based on figures using the cash based turnover method?

also just to make sure - the fact that I can choose withdraw date does still make qualifies it as 'cash' date?

 

Replies (8)

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chips_at_mattersey
By Les Howard
20th Apr 2017 11:24

I am not convinced that the date you withdraw the money is the cash received date. If the invoice has been paid by the customer, then you are deemed to have received it.
And, you don't need to notify HMRC of the change in method.
And, is the FRS worth using for such cross-border supplies?

Thanks (3)
Quack
By Constantly Confused
20th Apr 2017 11:42

I agree with Les, I would say you have received the cash once it is available to you, not when you actually draw it.

Thanks (2)
RLI
By lionofludesch
20th Apr 2017 12:15

As far as I'm can see, the money is paid to you on the date that you can draw it down - which seems to be invoice date.

Would it not be an easy way to delay paying VAT if it were so simple to say "oh no, the business hasn't received the money - it's not in the business current account, it's in a deposit account"?

If invoice date is truly the date the money is available to you, you can probably only lose by using the cash basis as it'll delay the date you can reclaim input tax.

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Replying to lionofludesch:
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By momo188
20th Apr 2017 13:22

lionofludesch wrote:

Would it not be an easy way to delay paying VAT if it were so simple to say "oh no, the business hasn't received the money - it's not in the business current account, it's in a deposit account"?

Is that a valid argument? I mean, does HMRC recognise difference in accounts?

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Replying to momo188:
RLI
By lionofludesch
20th Apr 2017 14:14

No. Of course it isn't valid.

That's the point.

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Replying to lionofludesch:
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By momo188
20th Apr 2017 14:22

ok, sorry missed the joke :)

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By momo188
20th Apr 2017 13:20

Thanks all! That part of the business accounts for 20-30 percent - the rest works well under FRS hence I will probably keep to it.
I understand the point re cash date which i suspected even though the person on the VAT helpline thought it should be fine. But I am left wondering what else can I do - withdrawing the money every month means both me and HMRC are loosing money on fees... and as it stands at the moment the filing is not accurate...

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Replying to momo188:
RLI
By lionofludesch
20th Apr 2017 14:15

You don't need to withdraw it. You should account for the sales whether you withdraw it or not.

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