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Post Info TOPIC: when to post retention invoices
Meadowlands


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when to post retention invoices
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I have a client that uses retention on jobs they do.  So they hold back 3% for a year from sub contractors and their clients hold 3% for a year but invoices are raised now with a due date of 365 days.  They don't want me to post the invoices until they are due but I think they should be posted when they are raised for VAT purposes.  They have just had to move to accrual VAT from cash due to turnover so they are concerned about managing cash flow.  Any thoughts?



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Alison - Simply Balanced Solutions
Cheshire


Master Book-keeper

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Hi Alison
The construction industry has special rules on such. I dont look after any so would need to refresh my memory - so take a look at these...

www.gov.uk/government/publications/vat-notice-700-the-vat-guide/vat-notice-700-the-vat-guide

www.hmrc.gov.uk/manuals/bimmanual/bim51520.htm

www.hmrc.gov.uk/manuals/vattosmanual/VATTOS5170.htm

There may be more. Question will be - should the invoices have been issued yet?

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 Joanne 

Winner of Bookkeeper of the Year 2015, 2016 & 2017 

Thoughts are my own/not to be regarded as official advice,which should be sought from a suitably qualified Accountant.

You should check out answers with reference to the legal position
pictures


Senior Member

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We use the Valuation system in this situation.

For a large job we send the client a monthly Valuation and then issue an invoice on receipt of the payment deducting the retention amount.

For a smaller job we just issue one invoice at the end of the works but again deduct the retention.

The retention is then invoiced 12 months from completion.

So the invoice will read:

For works carried out at XXXXX as detailed in our quotation £10,000

Less 2.5% retention -£250

Total £9,750

plus VAT etc

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Julie
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