I've got new client. He started trading as LTD last year and registered for VAT in Apr'11. Although first vat quarter runs Apr to Jun he raised few vat invoices in March.
Am I supposed to enter these invoices into system (we're using online accounting solution Clear Books) with March date and manually adjust vat return or with April date but then what will happen with accounts for last financial year (we've received corporation tax notice for period Nov 10 - Mar 11 already so I guess March invoice should be included in that...)?
You've explained it quite well, but I have a couple of questions. Was reaching £73,000 turnover the reason for VAT Registration ? Did he charge VAT on outputs during March?
Am I right in guessing there is some relationship between why you mention pre-registration sales (march 11) and the short CT period?
Hi, Was it a voluntary VAT registration, or a compulsory registration? Assuming it was a voluntary registration, when was the effective date of registration? Did your client have registration back-dated to March? If he had it back-dated to March, then he should have raised VAT-inclusive invoices (while the VAT registration was pending) and then issued proper VAT invoices when the VAT registration came through. (See HMRC website for details of what should have happened: http://www.hmrc.gov.uk/vat/start/register/waiting.htm )
Again, assuming it was a voluntary registration, if the VAT registration date wasn't until April, then the March invoices should not have VAT in them. You might need to think about what the correct VAT point was for the supply you are invoicing for, as to whether the March invoices should have actually have an April date or a March date (see HMRC website for tax point info: http://www.hmrc.gov.uk/vat/managing/returns-accounts/tax-points.htm )
Also don't forget that he may be able to claim VAT back on pre-registration purchases, subject to the rules, of course. (broadly these are: goods that were still on hand, that were purchased up to 4 years before VAT registration, and services purchased up to 6 months prior to VAT regsitration). Again, see HMRC website for further details/conditions etc...
Re the accounts, you need to make sure that the correct sales are reflected in the correct year. The fact that he has received a corporation tax notice is kind of secondary, that's just a standard notification from HMRC - you would have needed to get the sales in the right year, regardless of receiving a CT notice.
Hi, It was voluntary VAT registration. I'm just looking at Certificate of Registration where the effective date is 1st April 2011 so I do understand March invoices should not have VAT on them. Louise, thanks for your advice. I believe HMRC website will be the best place to check.
We had a similar case recently - a client charging VAT on sales invoices prior to actual registration (voluntary registration). HMRC advice was to either adjust the sales invoices (and repay to customer the overcharged VAT) or to write to them and adjust the date of registration.
