A cient is a subcontractor and I will be registering them for VAT. I have read on the HMRC website that they should account for the VAT on their invoices by increasing the gross amount but not show the VAT element until their registration comes through. They then re issue the invoices showing the VAT element part . So I have 2 questions:
1. Should they put a note on the invoive to say VAT registration has been applied for?
2. How will this affect the CIS deductions made by the contractor?
A cient is a subcontractor and I will be registering them for VAT. I have read on the HMRC website that they should account for the VAT on their invoices by increasing the gross amount but not show the VAT element until their registration comes through. They then re issue the invoices showing the VAT element part . So I have 2 questions:
1. Should they put a note on the invoive to say VAT registration has been applied for? Yes I would. Be sure to invoice for the total including the VAT and say that the total includes VAT and that a VAT invoice will forward in due course.
2. How will this affect the CIS deductions made by the contractor? No effect. If registered for CIS then contractor will be deducting 20%. If you tell them the total includes VAT then they will be able to work out how much to deduct from them.
