About to Reach the VAT Threshold

[spiceygal69]

One of my clients is about to reach the threshold for registering for VAT.

However, he has several customers who have accepted a quote and paid a deposit for work that may have already started, or is about to start.

If my client now becomes VAT registered, does he have to go back to these customers and put 17.5% on their quote? As these customers are private, ie not VAT registered, it will hurt!

For future quotes, jobs etc at what point does he start adding VAT? His registration forms will be completed next week and then it is how ever long the VAT office take to process it.

Thanks for any advice you can give

[Paul Taylor]

You seem confused about the point at which your Client becomes registered.

If he exceeded the registration threshold during April 2007 he was required to notify HMRC by the end of May and will be registered with effect from 1 June 2007. This will be the case irrespective of how long it takes HMRC to notify you of the registration.

The time of supply for services (which I'm assuming your Client supplies) is the earlier of invoice, payment or completion. Any jobs deemed to have been supplied after the date of registration will attract VAT.

Regards,

Paul Taylor
Senior VAT Consultant
http://www.dains.com/