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Post Info TOPIC: Tax point on deposits
Artois


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Tax point on deposits
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Morning all

Just wanted to check something with you to make sure I am correct,

 

Am I right in thinking that if a business receives a deposit for a future job that this is held on the balance sheet until the work/services are carried out and at that point it will be recognised as income? However from a VAT perspective the tax point will be the date that the deposit is received and therefore will count towards the VAT threshold if not registered.

 

Grateful as always for any thoughts

Cheers



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Doug

These are only my opinions of how I see things and therefore should not be taken as advice
Leger


Master Book-keeper

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Morning Doug

Yep to both. On VAT, if invoice issued before receiving deposit the invoice date is the tax point.



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John 

 

 

 Any advice given is for general guidance and professional advice should be sought applicable to your circumstances.
Artois


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Leger wrote:

Morning Doug

Yep to both. On VAT, if invoice issued before receiving deposit the invoice date is the tax point.

 Thanks John, thought so



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Doug

These are only my opinions of how I see things and therefore should not be taken as advice
Cheshire


Master Book-keeper

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To add to this, if deposit is refundable (or kept as comp for loss/damage) then no VAT.

A bit more in here www.gov.uk/hmrc-internal-manuals/vat-supply-and-consideration/vatsc05820

Not checked the Act for turnover calc (only cos its never impacted on a client)

As with my other post this morning - in certain circs a client account may also be required (eg ongoing rental of kit deposit, property rental etc)

__________________

 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
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