I have picked up a new client in the last 3 months. They became VAT registered at 1st June 2014 so VAT return deadline 7th October 2014.
Their first VAT return is going to end up in a repayment from HMRC to my client. With it being the first VAT return and it being a repayment do you think it is likely it will trigger an inspection? it's not going to be a lot of money. They are on a Cash Accounting basis and haven't raised many Sales invoices in the quarter and the ones they have aren't yet paid.
Probably not if not a big amount as HMRC are aware that it isnt unusual to have a repayment position with your first VAT return given one off set up costs etc.
It may result in a call from HMRC asking for an explanation which if they do just give the reasons eg one off set up cost, on cash basis so no output VAT due for unpaid sales invoices, etc.
I have a client that in doing their first VAT return to end Sept will also have a refund but expecting a refund of about £40k+ so expecting at least a call from HMRC looking for explanation.
Back to this VAT return. I think I have just confused myself with the Cash Accounting basis. My client became VAT registered from 1st June 2014.
I have a purchase invoice that was received in May before my client was registered for VAT. The invoice was paid by DD in June. Should I be claiming the VAT back on this?
