Reply To: Newbie here, Backdating VAT for new registration

Forum Categories GENERAL VAT DISCUSSIONS Newbie here, Backdating VAT for new registration Reply To: Newbie here, Backdating VAT for new registration

Trevor S

Income – You are required to account for VAT on your sales since the effective date of registration. This VAT is 1/6th of the sale price (i.e. 20% of what’s left after declaring the VAT). However, consider who your customers are. If they are VAT registered businesses, they may be prepared to pay a VAT-only invoice from you, as they would be entitled to reclaim the cost from HMRC. If you are able to raise VAT-only invoices, they would be for 20% of the original sale price, as it’s VAT on top of what you had already charged. If you are raising VAT only invoices, you need to include on your VAT return the amount of VAT shown on them instead of just the 1/6th – but you’d still be keeping the full amount that you’d previously charged.

You can do a combination of these – e.g. raise VAT only invoices to VAT registered customers and calculate the 1/6th for others. All VAT on your income goes in box 1 (outputs)

Expenditure – suggest that you see HMRC’s guidance here for time limits:
Where this guidance allows you to reclaim VAT, it goes in box 4 of your return (inputs).

You do need to use individual invoices here – you can’t just take 1/6th of your VAT inclusive cost of sales.  Unfortunately there aren’t any shortcuts to the process.  HMRC do have some discretion to allow VAT recovery where VAT invoices aren’t held (you would need to contact them with full details for them to consider) – but they’re unlikely to allow you to estimate a claim simply due to the amount of work involved in establishing the correct figure.