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Post Info TOPIC: VAT + Pro Forma Invoice + Cash Accounting
Wella


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VAT + Pro Forma Invoice + Cash Accounting
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Hi All

Hoping some one will confirm that I have understood HMRC correctly.

My client is on VAT cash accounting and has paid a pro forma invoice to pre pay for goods.

My understanding is that, with cash accounting, the tax point is created on the date goods or services are paid for, and that the purchase and VAT should be accounted for at that point. A formal VAT invoice must be sent by the supplier within 14 days.

Whilst I understand that a pro forma invoice is not acceptable evidence, for VAT purposes, I am a little unsure if I have understood the time of supply/ tax point correctly.

As usual any input gratefully received.

Bill

Footnote: VT Transactions has an a drop down option to select a pro forma invoice when you enter a purchase invoice and adds the values to the VAT return, which prompted my question





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attilabenko


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Hi Bill,

I would think the time of supply is when the payment made or the VAT invoice issued whichever is the earlier. There is a HMRC note out there about exceptions on time of supply and advance payment is one of those. The pro forma invoice has to be ignored in my opinion as it is not a VAT invoice - no tax point has been created with this- so it must be either the payment or the VAT invoice.
Hope this helps...

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Attila
attilabenko


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So yes sorry i missed that one, as it is cash accounting it would be the date of payment anyway?

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Attila
attilabenko


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ok I found it:

http://www.hmrc.gov.uk/vat/managing/returns-accounts/tax-points.htm

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Attila
semsley


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With cash accounting you account for the VAT on a sale when the sales invoice has been paid and for VAT on a purchase when you have paid for the goods. Therefore if paying a pro-forma I believe the tax point would be when you paid the pro-forma, however, you must get a VAT invoice from the supplier.

A couple of years ago one of my charities (which uses cash accounting) moved to new premises and had loads of capital purchases some of which were on pro-forma. With one supplier it took ages to get the VAT invoices for the goods we had paid on pro-forma, but we eventually did. We also had a VAT inspection (because of the huge rebate) and nothing untoward was found so I presume the way I perceived it may be correct.

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Wella


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Sheila and Attila.

Many thanks, you have confirmed what I thought. Got a bit word blind after reading the documentation so many times.

Bill

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