Registering for VAT

by **Incredulum** on Fri Jan 20, 2012 2:35 pm

An individual incorporates a company to provide advice. The intention is to VAT register under the flat rate scheme as input VAT will be small.

Several pieces of work have already been undertaken, but no invoices issued yet. One of these pieces of work was for a non-VAT registered client.

Can the company invoice the non-VAT registered client and then register for VAT and issue the other invoices?

Thanks.

by **Generix** on Fri Jan 20, 2012 2:43 pm

Incredulum wrote:An individual incorporates a company to provide advice. The intention is to VAT register under the flat rate scheme as input VAT will be small.

Several pieces of work have already been undertaken, but no invoices issued yet. One of these pieces of work was for a non-VAT registered client.

Can the company invoice the non-VAT registered client and then register for VAT and issue the other invoices?

Thanks.

Ok, simply put it is the combination of tax point and effective date of registration which will determine whether or not this can be done;

Your effective date of VAT registration will be on your VAT registration certifate once you are VAT registered.

Any supplies with a tax point falling on or after that date will be subject to VAT.

Hope that makes sense?

by **Generix** on Fri Jan 20, 2012 2:45 pm

This of course assumes its a voluntary reg rather than a compulsory one - in any case the EDR/tax point still remains valid, it's just the EDR isn't as flexible with a compulsory reg (obviously).

by **Incredulum** on Fri Jan 20, 2012 3:26 pm

Thanks, that sounds like a good result.

This is a voluntary reg.

Therefore the invoice to the non-reg client can be sent out now, application for registration made, and then the other invoices sent out once registration complete. (Or earlier?)

by **Generix** on Fri Jan 20, 2012 3:58 pm

Incredulum wrote:Thanks, that sounds like a good result.

This is a voluntary reg.

Therefore the invoice to the non-reg client can be sent out now, application for registration made, and then the other invoices sent out once registration complete. (Or earlier?)

For most services, practically speaing the tax point is when the invoice is raised. Therefore assume the tax point is date of invoice.

Therefore as you suggest, raise an invoice at e.g. 1.2.2012; then on your application for VAT registration - request to be registered from 1.3.2012 (or any date after 1.2.2012) - so that the supply is not caught as VATable.

With regards to your other supplies, I'm guessing you want them caught as they will earn you/your client a bit of extra profit under the flat rate scheme, therefore ensure the invoice date for them is a date AFTER the date you request on on your VAT registration form.

Hope that all makes sense?

by **section 44** on Fri Jan 20, 2012 4:01 pm

Even if the invoice isn't a tax invoice? Wouldn't payment after 1.2.12 mean that a tax point is created?

by **Generix** on Fri Jan 20, 2012 5:06 pm

section 44 wrote:Even if the invoice isn't a tax invoice? Wouldn't payment after 1.2.12 mean that a tax point is created?

No - you would argue service has been completed evidenced by being invoiced for in full.

(I have made the assumption that the service would have been completed by this time, probably evidenced by the advice/report etc being sent out prior).

Practically HMRC still accept invoice date as completion date for simple cases like this. In any case I don't know of any ERP system that currently captures 'service complete' date

by **Generix** on Fri Jan 20, 2012 5:37 pm

Generix wrote:
section 44 wrote:Even if the invoice isn't a tax invoice? Wouldn't payment after 1.2.12 mean that a tax point is created?

(I have made the assumption that the service would have been completed by this time, probably evidenced by the advice/report etc being sent out prior).

That should read as probably additionally evidenced.

(Art 63 of EU VAT dir states that the tax point arises when the services are supplied)