When do I start counting time for VAT

VAT rolling period start date?

Didn't find your answer?

I started my NEW self-employed/sole-trader business on 17 September 2018. Completed my first paid work on 27 September and invoiced that day too and was paid my first Invoice on 30 October. I am using cash accounting. Which date do I use to start counting from forthe 12 month rolling  VAT purposes? 

Replies (22)

Please login or register to join the discussion.

the sea otter
By memyself-eye
13th May 2019 11:56

17 September 2018.

Thanks (0)
Psycho
By Wilson Philips
13th May 2019 12:14

The start date is irrelevant. You look backwards from today and count value of supplies made in the last 12 months.

Thanks (0)
avatar
By Vile Nortin Naipaan
13th May 2019 12:19

I wouldn't bother until you think you're nearing the limit.

Thanks (0)
avatar
By jwgrogan
13th May 2019 13:11

I think the question is - does this income drop out of the rolling 12 months on 27/9/20 based on invoice date, or 30/10/20 based on receipt date.
I assume that on for cash accounting it is the latter.

Thanks (0)
Replying to jwgrogan:
Psycho
By Wilson Philips
13th May 2019 14:50

I'd say 27 September 2019 regardless of whether cash accounting being used (and not because of invoice date but because the date of supply was apparently 27 September 2018).

Thanks (0)
avatar
By fawltybasil2575
13th May 2019 13:34

@ karen hulme (OP).

Your “opening month” is September 2018, regardless of the fact that the first monies received were in October 2018 (I shall explain the rationale in my next paragraph below).

It seems probable that the principle behind your question is whether the 12 month rolling taxable turnover is based upon (i) the invoice date or (ii) the “cash” date (ie the date on which payment is received); and I surmise that your question arises BECAUSE the “cash accounting” method is being adopted for INCOME TAX purposes.

The answer is that, for the purposes of determining the date of compulsory VAT registration, the INVOICE date is king (the fact that CASH accounting is being adopted, for Income Tax purposes, not being relevant). You should therefore keep a record of the “rolling 12 months” INVOICED taxable turnover figures.

My above comments are of necessity a slight over-simplification, inasmuch as I assume that invoices will NOT be dated after the date of receipt of payment (for hopefully obvious reasons one cannot postpone the registration date by delaying the issue date of the invoice until a later month – if the payment date is before the invoice date, then the payment date is used instead).

Basil.

Thanks (1)
Replying to fawltybasil2575:
Psycho
By Wilson Philips
13th May 2019 14:44

I disagree, Basil.

Ignoring the 14-day rule, the tax point is the earliest of date of supply, date of payment and date of tax invoice. If the business is not registered it cannot issue a tax invoice so only the former two events need to be considered.

Thanks (0)
Replying to Wilson Philips:
avatar
By fawltybasil2575
13th May 2019 15:12

@ WP.

In thanking you for your note of disagreement, may I advise that I was seeking to simplify the matter for the OP.

Her question refers to the issue of an invoice rendered upon completion of the supply, and one assumes that such will be the modus operandi in future.

Given also that the distinction between the supply date and the invoice date is of no relevance (to the registration date requirement) unless those dates fall in separate months, I feel that my simplification approach was appropriate (and one which in practice is normally adopted by HMRC too).

Basil.

Thanks (0)
Replying to fawltybasil2575:
Psycho
By Wilson Philips
13th May 2019 16:53

I appreciate your attempts to simplify matters, and note that the point made by me was already effectively covered in your final paragraph above.

However, in trying to simplify matters you may end up causing more confusion.

"The answer is that, for the purposes of determining the date of compulsory VAT registration, the INVOICE date is king ".

Of course, if the invoice date always coincides with the date of payment and/or supply, then the date of the invoice accidentally becomes relevant. But that apparently generalised statement, as it stands, is at best misleading, and is the point that I was disagreeing with .

Thanks (0)
Replying to fawltybasil2575:
avatar
By Wanderer
13th May 2019 18:20

fawltybasil2575 wrote:

.... and I surmise that your question arises BECAUSE the “cash accounting” method is being adopted for INCOME TAX purposes.

....... (the fact that CASH accounting is being adopted, for Income Tax purposes, not being relevant).

Surely the OP is more likely to be referring to Cash Accounting for VAT rather than IT?
Edit: see below.
Thanks (0)
Replying to Wanderer:
Psycho
By Wilson Philips
13th May 2019 18:02

But if she’s not VAT registered then Cash Accounting for VAT is irrelevant!

Thanks (0)
Replying to Wilson Philips:
avatar
By Wanderer
13th May 2019 18:19

Well yeh!

Ah, I now see the OP's reference to 'I AM using cash accounting' so now I see why Basil refers to it.

Anyway I think my 17:49 post is the most relevant, i.e. it is the 'making of taxable supplies' that the OP should look at.

Thanks (0)
Replying to Wanderer:
Psycho
By Wilson Philips
13th May 2019 18:36

I agree. And what matters is the time of those supplies.

Where Basil’s advice is, in my opinion, misleading is the reference to invoice dates. Although they may be coincidentally the same as the tax point they do not, for an unregistered trader, determine the tax point.

Thanks (0)
Replying to Wilson Philips:
avatar
By fawltybasil2575
13th May 2019 19:28

@ WP. Basil of course respectfully disagrees, as his 19.21 post below [Basil's typing speed is notoriously pedestrian !] states :).

Basil.

Thanks (0)
avatar
By Wanderer
13th May 2019 17:49

My two pennoth.

Think we've discussed it before on here that HMRC's statement here https://www.gov.uk/vat-registration/when-to-register
where it says

= HMRC wrote:
Between 10 July 2017 and 9 July 2018 your VAT taxable turnover was £100,000. That’s the first time it has gone over the VAT threshold. You must register by 30 August 2018. Your effective date of registration is 1 September 2018.
is misleading.
When you look at the legislation:-
https://www.legislation.gov.uk/ukpga/1994/23/schedule/1
you look back from the end of the month at (up to) the last 12 months.

My thoughts are that all this talk about cash accounting is a red herring. The legislation refers to 'making taxable supplies' not how you might choose to account for VAT once registered.

Thanks (0)
Replying to Wanderer:
RLI
By lionofludesch
13th May 2019 18:50

Wanderer wrote:

My two pennoth.

Think we've discussed it before on here that HMRC's statement here https://www.gov.uk/vat-registration/when-to-register
where it says

= HMRC wrote: Between 10 July 2017 and 9 July 2018 your VAT taxable turnover was £100,000.

I thought they'd changed that now.

It's wrong, anyway, I agree.

Thanks (0)
Replying to lionofludesch:
avatar
By Wanderer
13th May 2019 18:58

Nope, example is still there.
They actually get it right but saying:

HMRC wrote:
If you exceeded the VAT threshold in the past 12 months
You must register if, by the end of any month, your total VAT taxable turnover for the last 12 months was over £85,000.

You have to register within 30 days of the end of the month when you went over the threshold. Your effective date of registration is the first day of the second month after you go over the threshold.

but in the immediately following example state what I've copied over earlier.
Thanks (0)
Replying to lionofludesch:
Psycho
By Wilson Philips
13th May 2019 19:12

It’s wrong partly because of the incorrect use of one very small word - in the guidance they use the phrase “BY the end of any month” (which just about but not quite makes their guidance ‘correct’) but the legislation says “AT the end of any month”. There is an important difference, which appears to be lost on HMRC.

Thanks (0)
avatar
By fawltybasil2575
13th May 2019 19:21

(1). @ Wanderer.

Re your 17.32 post, and given that the OP's initial question states "I am using cash accounting" (ie the present tense) at a point when the OP is not registered for VAT, I must respectfully disagree your view that the OP is referring to Cash Accounting FOR VAT.

As regards your 17.49 post, I must confess that I do not understand the point which your words "all this talk about cash accounting is a red herring" are intended to convey.

My original post (at 13.34) sought to explain to the OP that the date of receipt of cash is NOT relevant: and that one must not confuse the TWO Cash Accounting concepts (ie the Income Tax concept and the VAT concept -albeit the lay person might understandably confuse them).

(2). @ Wilson Philips.

Re your 16.53 post:-

(i) (As I mentioned previously) if the date of supply is in the same month as the invoice date, then any "difference in date" is rendered academic as such "difference" has no impact on the registration date,

(ii) In PRACTICE, as I have also mentioned [I would add that this is especially so where the supply is partly or wholly of services (indeed, where the services arise in more than one month, it is the most practicable)] it is customary, on grounds of expediency, to treat the invoice date (if it is on or shortly after the end date of the supply, as indeed in the large majority of cases it is) as the date of supply.

From my own experience, HMRC always, again on grounds of expediency, are happy to accept the invoice date as the date of supply. I normally "keep up my sleeve" the possible use of the more accurate "actual supply date", ie for adoption when very exceptionally such use would produce a more favourable outcome [when writing to HMRC in those exceptional circumstances, one has (in order not to breach ethical requirements) advise HMRC that one is using invoice date figures]. Frankly, and whilst one cannot be sure without further input from the OP (such comment in no way implies criticism of the OP) I would regard it as exceedingly unlikely that any "date differential" will have any effect on the registration date.

I thus, in fully respecting the contrary views of two eminent members, stand firmly behind my previous posts.

Basil.
PS. I would strongly advise the OP to seek guidance, from an accountant experienced in VAT matters, not only in relation to the specific point in her initial question, but in relation to OTHER matters (of which there are several) in the field of VAT registrations.

Thanks (0)
Replying to fawltybasil2575:
Psycho
By Wilson Philips
13th May 2019 19:53

"My original post (at 13.34) sought to explain to the OP that the date of receipt of cash is NOT relevant"

Perhaps in this particualr case, but in general for an unregistered trader the date of receipt of cash can be very relevant. If you wish to continue to advise clients and others that it is the invoice date that matters - whether through sheer coincidence or otherwise - that is up to you. In my experience, when it comes to VAT matters, it is prudent to base one's advice on what the legislation says.

Thanks (0)
Replying to Wilson Philips:
avatar
By fawltybasil2575
14th May 2019 00:21

@ WP.

Forgive me but, since I have:-

(i) sought to provide constructive advice to the OP, and

(ii) explained both (a) the legislation AND (b) the slightly different normal practical interpretation of that legislation (but how one keeps in mind the legislation when dealing with those practicalities, when representing the clients),

I am a touch disappointed that you should have incorrectly INTERPRETED my posts as my acknowledging that I give advice to clients (and others) which is CONTRARY to the legislation. In reality, one explains BOTH the legislation AND the practical interpretation of the legislation (albeit, in the OP’s case, quite frankly the distinction between the two will almost certainly be NIL).

Basil.

I

Thanks (0)
RLI
By lionofludesch
13th May 2019 22:00

We're possibly overthinking this.

Instead of delving into the minutiae, I think the OP just wants a bit of clarification on when the starts with the sums.

Imho, the first calculation is to 30th Sept 2018 and monthly onwards.

Thanks (1)