I have taken on a client (sole trader) who has given me the customery `bag of receipts` - I am working my way through year 08/09 (year ending 31/03),
His bank receipts total £80450.00 - he is not vat registered - the threshold for 08/09 is £67,000.00 - what should I do ?? my first thought is that he should register and pay vat on the difference - is this correct ??
If your clients customers are VAT registered it does happen quite a lot this situation and your client can issue a VAT element invoice with an explanation letter, his VAT registered customers won't mind as they pay it then claim it back on their next VAT returns.
Your client would be able to claim VAT back on purchase invoices (this can get more complicated because you can go back some number of months on some services/goods but not others. Think that the basic ruling is that if a service or good is still in existence now you can, but if it is already gone like petrol then you can't. Would be worth you looking at HMRC website for a list of items you can and can't because it will have the exact details.
Well I only have one client so far, so from my wealth of experience :D I can say that my client hasn't been text book at all, three years worth of receipts in boxes, several bank accounts, several credit cards - it has been a major eye opener. It's a good thing that I enjoy a challenge :D
