Spent the day at a garage today helping a new client with their first VAT Return.
I think they may have an issue if HMRC were to look into the into the final figures submitted, as they have not paid VAT on all Vatable sales in the period.
The reason for this is because they were waiting for their VAT number to be provided by HMRC and the first £ 500 of Sales did not show any VAT added as he did not know if his application had been successful. The garage does mainly MOT's, around 75% of total turnover so it is not a huge issue.
I have said that if HMRC were to ask to complete a VAT check then I think they would ask for £ 500 / 6 and get the Vat from the gross figure although it was not originally charged to the clients
One of my clients had to send out additional invoices (although not many) with the VAT on them as HMRC very kindly back dated the VAT date! I suppose with a garage that would be difficult to do as some of them are just Joe bloggs off the street having an MOT or service. And like you say if most of it was MOT's then they are Vat exempt anyway.
The business started on 1st April 2012 and they VAT Registered from day one. For some reason their first VAT period was for only for one month from 1st to 30th April.
Just have to wait and see if HMRC request any further information from the client now.
From the registration date, VAT will be due on all sales, except for MOT test fees. The client will not easily be able to recover the money from previous customers, so will have to bear the cost. From your first post, the sums involved are not large. However, the principle is that VAT is due even though the VAT number was not issued; and that is because the client was registered for VAT - hope you are clear on this distinction.
There have been long delays in issuing VAT No's in recent years. Words to the effect of "VAT to be billed separately" or " full VAT invoice to follow", should ensure the customer is aware they are paying only the net amount.
