I have set up a company in UK(a website), I will do my best to explain my problem.
1)I will sell mp3s ONLINE, therefore the bands will be my suppliers.
2)Each time I will sell a song, I will also be supplied with it, both transactions will be done at the same time.
3)In order to get a fast and reliable invoicing system, someone suggested to create a self invoicing module for my site, we have spent a long time on it and we are nearly there.
4)here are the questions:
When I have to repay a band, I receive a confirmation in my system that a band wish to get paid, from that point a self invoice is created for me from them but it is actually writen by myself and agreed with my supplier via a contract.
When I generate a self invoice, what shall I put in the invoice? Could you please let me know if this is correct:
DATE OF INVOICE: DD/MM/YYYY INVOICE REFERENCE
FROM: Supplier Business name or Supplier name Supplier Surname Supplier address Supplier V.A.T number if any
To: My business name My business address My business V.A.T number
Self invoicing is very easy. When you generate a sales invoice, it ouwld be better to generate the self invoice at the same time - to help with keeping track.
The self bill invoice will be in the same format as any supplier - your idea as above is fine, remember to show their VAT number also on the invoice. Also a note at the base should say 'the VAT shown is your output tax due to revenue and customs'
You should send a copy to the supplier once it has been created. You could add a date on the invocie as to when it will be paid and can use it as a remittance advice at the same time.
But you need your suppliers to agree to self billing by completing a form that you create and send to them.
The agreement between the bands and I will be established when the band register an account with us(he will need to tick the "I have read the user agreement...") the self invoice will be explained in it.
I would also like to ask you something else please, the bands will be from UK,EU(but not UK) and outside EU, just to double check the programming one on my site:
-When we pay a supplier from UK V.A.T registered we add V.A.T to the net price -When we pay a supplier from UK but not V.A.T registered we do not add V.A.T to the net price -When the supplier is from EU (but not UK) and is V.A.T registered we add 0% V.A.T to the net price -When the supplier is from EU(but not UK) and is not V.A.T registered we do not add any V.A.T at all(or shall we add 0% V.A.T?). -When the supplier is outside EU we do not add any V.A.T at all.
Is everything ok?
Many thanks for your great help, I did not know about this "'the VAT shown is your output tax due to revenue and customs'"
All seems good but you have to be careful with the supply from EU VAT registered co's. You do not charge the VAT on the invoice, however you may need to do a Reverse Charge in your books. I would get advice from a VAT consultant over that one to be sure - I have to Reverse Charge for a company in Germany - all it means is that you enter the VAT amount for the invoice in Outputs and Inputs!
If they are not VAT registered, then no VAT and for outside EU, thye are also outside the scope if VAT.
I have asked an accountant and he told me to charge the V.A.T at 0% when the supply is in EU(but not UK).
I believe in my Quickbook pro 2008 software I will just need to put 0% on the payment invoice, I will still call the HMRC to make sure it is right because I have asked my webdesigners to built the self invoice software this way....I hope I don't have to change it as it cost a lot of money.
Thats right, the Vat will be 0% so thats fine for your self bill.
But for you in your books, you may need to add the Reverse Charge for VAT purposes - do not ask HMRC as they will not give you a definitive reply, ask your accountant instead.
