VAT increase, works orders,invoices

[turbull]

Received a works order at 17.5% before vat increase. Work is being carried out after the 4th Jan ? What Vat is paid.

[likeitorlumpit]

Received a works order at 17.5% before vat increase. Work is being carried out after the 4th Jan ? What Vat is paid.

 

You pay the vat rate applicable on the date of the invoice

So 20%

I believe you could beat the system by invoicing before jan 4th for works that hadn't yet taken place- whether that is borderline unlawful i'm not so sure

[Rupe]

It depends on what you stated to the client. If it was xx amount plus vat at whatever the rate is then they have to pay the new vat amount. But if you stated vat at 17.5% tand that is what they expected then either you have to swallow the 2.5% yourself or just date your invoice before 4th Jan. Yes, that is borderline dodgy!!

[volvo]

If work started after the new vat rate came in you are supposed to pay that rate.

You could always say you started on the 3rd which would mean vat at 17% ,your choice!

Sorry Rupe you posted similar.

[John Russell]

Received a works order at 17.5% before vat increase. Work is being carried out after the 4th Jan ? What Vat is paid.

 

To be precise the vat should be charged at the rate that was pertaining on the date the supplies were made or the day the work was done (or, if it takes several days or weeks, the day the work is completed*). The date an order was received is irrelevant. The date the work is completed is called the 'Tax Point'. In practice when there is a change in rate I'd try to invoice all work done before the rate changes. If you're using a good basic accounts package you should be able to backdate an invoice (rather than raise it on the day you're sitting at the computer).

 

Example.

 

You do the work on 22nd December, therefore the rate is 17.5%. You come to 5th of January to invoice it (because you were too merry to bother over Christmas) so date the invoice 22nd December and charge 17.5%. This has the added benefit that the client puts it in his December invoice pile and might pay it a month before he would if it has a January Tax Point.

 

The important point is that the date on the invoice -- the 'tax point' -- is not necessarily the date you write the invoice out and post it (it's not a letter!). In theory the posting date could be many weeks later -- though always make sure all invoices are up to date before you close the vat quarter.

 

More at: HM Revenue & Customs: VAT invoices: what they must show

 

Personally I recommend Quickbooks for accounting (I've used it since 1995) -- though many accountants are too anal to like it. It's incredibly flexible, intuitive and therefore easy to use. Business Accounting Software Special Offer | 20% Off | QuickBooks UK

 

*If a job goes on a long time why not issue a 'stage payment' for work done up to a certain date? Check with the customer first though, because some organisations don't allow this in their terms of business).

 

Hope that helps. Any other questions just ask.

 

Best wishes,

 

John Russell