I've got a client who has just given in his annual accounts paperwork and (despite previously telling me that he was monitoring it) has exceeded the VAT reg threshold and so I need to backdate an application for him.
They have been working on a big building project for several months, so presumably there will be an overlap in the work done prior to being registered, and after.
As the work is ongoing he has not yet issued a final bill, excluding a few "lump sum" payments long the way which he has raised invoices for, so my question is whether the balance would now all be subject to VAT if the invoice is raised now?
Per usual I can't find anything in the HMRC guidance, only information about treatments of the deposits but nothing about work in progress.
Hi Faye
Im assuming none of this could be zero rated? Which (fingers crossed) leaves it below the threshold?
Have you see VAT notice 708 - section 23 will help you out with tax points.
Can get quite complex in this sector so if you arent too familiar with it or uncertain in any way then I would look to get a VAT expert on board. (Look up Les Howard!)
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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
The work wouldn't be zero rated, unfortunately! Although I think even zero rated work would be included within his turnover for VAT reg purposes...?
I've got a specialist looking into it at the moment but they've gone on holiday... was just wondering if anyone else had come across this before as I surely can't be the first person ever :p
Sorry for the confusion, but I added a note later about exempt supplies.
When is the specialist back? How far have they got into it? Wondering if you should or could involve someone else.
There isnt enough info in your original post to be able to answer due to the very complex nature of this sector. Ive posted on another thread in the last couple of days about a similar thing, as did our resident VAT expert Les and also our Moderator Shaun. Might be worth a look at that. But the 708 is your start point as it does cover off the advance payments position.
Although when I started the above post I was hoping you might keep below the threshold with your exempt supplies, so worth checking on those first.
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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
Ah yes I see the other note now - but unfortunately no exempt supplies either.
The VAT specialist was due back today so I will give her a ring tomorrow and post the outcome here.
I did look over Notice 708 before posting a thread here and the only part that seemed relevant was under Section 23.1.1 which says about receiving stage payments and the tax point becoming the earliest of either a deposit being received or an invoice being issued - this points towards our client needed to charge VAT on any work not invoiced until after he was liable to be registered... but perhaps if he had finished the work BEFORE he was registered and then invoiced more than 14 days afterwards he might be covered by that rule that then reverts the tax point back to being when the services were finished....
*Sigh!! VAT is far too complicated to have such vague guidance!!
