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Vat on sales invoices pre registration

Vat on sales invoices pre registration

I registered a client for vat and the date of reg has come through as 1 oct. For the work she did for a client in September she issued it in October. I've got myself a bit confused as I would have thought that as she wasn't registered in sept no vat was due but there seems to be reference on HMRC website to a 14 day rule and as she raised the sales invoice in October, may have to pay vat on the last 14 days in sept??
Would the easiest thing be for her to do her invoice again and date it 30 sept to avoid this problem?
Thanks in advance I didn't know there was such a rule!


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30th Nov 2012 10:31

probably better to do a credit note

Do a credit note for the invoice issued in October.

Then ensure she invoices for all the work in September on 30 September.

If you use cash accounting, remember the exclude the receipts relating to September.


Thanks (2)
03rd Dec 2012 14:17

I really don't believe it...

Are professionals really advocating the issue of false documents? Maybe I have mis-read what has been suggested but to me it reads as follows:

"Let's cancel or credit the invoice which was physically issued to a client in October, and replace it now (in December) with a new invoice which we will back date as 30 September and then pretend it was actually issued on 30 September and in that way the VAT is avoided"

Except what is being suggested would not be "avoidance" (legal) but "evasion" (illegal).

For anyone to advise properly more information is needed, e.g. what was the nature of the service(s) supplied, was the supply wholly performed pre-registration or was there a continuous supply of services which straddled the date of registration? Was it a retrospective registration? Why was the invoice issued post registration without taking account of VAT? Is the client able to recover VAT?

Attempting to re-write history does not change what actually happened but it could ead to severe penalties...

Thanks (1)
03rd Dec 2012 21:34

Sorry, I think you have mis-read or maybe misunderstood

Firstly, the credit note can be issued with today's date or within the time limits allowed, which is within 30 days of the date of supply of the goods or services.

Secondly, the business was registered for VAT with effect from 1 October, meaning VAT invoices must not be issued before this date. The work was carried out in September, which is before the VAT registration date. You are not allowed to charge VAT when you are not VAT registered. This is one of the basic rules of VAT.

All work carried out since VAT registration should have VAT added at the prevailing rate, which is currently 20%.

Finally, do not forget about pre-registration input VAT recovery.



Thanks (2)
04th Dec 2012 10:38

I hoped I had but I don't think so...


Chicka said: "she raised the sales invoice in October "There was no suggestion of VAT having been charged before October, i.e. pre-registrationChicka said: "Would the easiest thing be for her to do her invoice again and date it 30 sept to avoid this problem? Your response was: "Do a credit note for the invoice issued in October.

Then ensure she invoices for all the work in September on 30 September." 

The above looks pretty clear and I don't see how a person can retrospectively re-invoice September work on 30 September (assuming H G Wells hasn't been careless with his time machine). I can fully accept what was written may not have been what was intended but both Chicka and Chicka's client could find themselves in hot water by following the course of action outlined.

As I intimated, with better facts we may be able to conclude there is no VAT liability, for example if the fact pattern matches that in the case of B J Rice & Associates, a decision of the Court of Appeal. Mistakes in VAT are more likely to arise as a consequence of advice being given without all of the facts being presented or determined.

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04th Dec 2012 11:00

I can see where the confusion lies


You seem to be confusing the rules for VAT registered businesses with those that are not VAT registered.

The VAT invoicing rules do not apply to traders who are not VAT registered.

The supplier could simply issue a fee note, or even write a letter to the customer detailing the work carried out in September. No VAT should be added to this as the trader was not registered for VAT at the time. Additionally, today's date could be put on that fee note.

So as you can see there is no need to enlist the help of HG Wells and his time machine.

If you are still unsure about this, then please refer to the invoicing rules for non-VAT registered traders.


Thanks (0)
04th Dec 2012 11:41

What is all the fuss about?

Ignoring the rule about time of payment (we're not told when the customer paid), the basic tax point is the date of supply - in this case September when the trader was not registered. The taxpoint is later only if a VAT invoice is raised within 14 days. If the invoice is not a valid VAT invoice then it has no effect on the taxpoint.

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04th Dec 2012 12:12

This is a VAT registered business though

Sorry I'm with 'Taxbreak' on this in VAT you shouldn't suppose facts that are not in evidence. When the invoice was raised the business was VAT registered. What we need to determine is whether when the supply was made the business was a taxable person, and that we haven't properly done yet.

I'd agree that were the supply is not made by a taxable person then the 14 days actual tax point rule is irrelevant as to the charging of VAT, this presumably being the 'invoicing rules for non-VAT registered traders' that you refer to. Which as 'Taxbreak' has pointed out is the view adopted by the Court of Appeal in the BJ Rice case.

I wouldn't even take much issue with the view that the initial comments suggest that the trader was not a taxable person when the supply was made. But this is just hinted at in the OP with "work she did in September", it doesn't say a 'service completed in September' we have no way of knowing what this was and whether it's still going on or whether everything was done and dusted on 30th September or 20th September and so we have no way of knowing when the supply was properly made/completed.

As 'Taxbreak' is clearly aware the tax point rules determine when VAT is accountable not whether it's accountable. Whether it's accountable is decided by whether a supply is made by a taxable person, and to decide that we need to know what supply has been made. If this was a discrete service that was completed prior to VAT registration then yes S4(1) of the VAT Act doesn't apply and the supply carries no VAT no matter when invoicing takes place, however if this is part of a continuous supply of services then it was not complete at the date of registration and it is separately and succesively seen as supplied each time an invoice is issued or payment received, which in the current case both take place after the date of registration, and VAT would be applicable.

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