Have been browsing this forum trying to figure out an answer to my situation but I can't seem to get my head around it.
I run an employment agency (Ltd), I voluntarily got VAT-registered recently. My workers have their own limited companies. My company provides workers to clients and then after the service we invoice the client.
I have received an effective date of registration.
My first question is:
I provided some services to clients prior to my effective date of registration but made an invoice after the date and included the VAT and was paid it by the client. What is the status of this - have I done something wrong or is it OK? If it's wrong what do I do with the VAT I received?
Second question:
One of my workers also got his Limited Company VAT registered recently and has sent me invoices for the period before he was registered but the invoices were made out AFTER his date of registration. So what do I do here? Do I pay him the VAT or not?
Third question:
What do I about the VAT rise - do I go by date of invoice or date of service provided?
HMRC is good reference point for VAT. Have taken the below from it and highlight what is is the main points
Time of supply for goods and services
The time of supply (tax point) for VAT purposes is defined as follows:
For transactions where no VAT invoice is issued (for example, sales to customers who aren't registered for VAT) - the time of supply is normally the date the supply physically takes place (as defined below).
For transactions where there is a VAT invoice -the time of supply is normally the date of the invoice, even if this is before or after the date the supply physically took place (as defined below).
However, see the exceptions detailed below.
Date the supply physically takes place
For goods, the time when the goods are considered to be supplied for VAT purposes is the date when one of these happens:
the supplier sends the goods to the customer
the customer collects the goods from the supplier
the goods (which are not either sent or collected) are made available for the customer to use - for example, if the supplier is assembling something on the customer's premises
For services, the date when the services are considered to be supplied for VAT purposes is the date when the service is carried out and all the work - except invoicing - is finished.
So in answer 2 your queries would say the following
1. Would say you have wrongly included VAT. Would re-issue invoice without VAT and refund the VAT paid by customer
2. If he has issued invoices with VAT would ask him to issue them again without VAT.
3. Date the service is provided though would expect if you are efficient in issuing invoices that you invoice as soon as the service is provided. I am assuming you had xmas and new year off so the timing of the service and invoice date should be at the same VAT rate so shouldnt cause any issue. I would guess that is the reason why the VAT rise was introduced just after the new year so problems between timing of services and issuing invoices was mitigated.
