New to VAT

[Mrsmossy]

hi, I have recently registered my husbands business as he has gone over the threshold and have come across a problem i was unsure about.
Prior to being VAT registered my husband quoted for a job worth £16000+ and didn’t include VAT as he was not registered at this point. The customer came back today to accept the price and has now left us in a pickle as we are now VAT registered. How will this work, will it have to come out of our pocket?
sorry it’s so long winded. Will appreciate your help.

[VAT-adviser]

The registration date is the date when you start charging VAT. It means all supplies after the date the registration should be effective are deemed to include VAT, whether explicitly charged or not. 

While it is tempting to issue VAT invoices with ‘VAT number applied for’ instead of a VAT number, this is technically in breach of the law. No mention can be made of the amount of VAT charged unless you are registered, and at the date of issue of the invoice, you are not.

Therefore you can’t charge or show VAT on your invoices until you get your VAT number/registration. You are not required to pay any VAT prior to the VAT registration period unless your registration date is backdated or you claim input tax for invoices received prior to registration (which can be 6 months of service invoices and 4 years of goods invoices). 

In that case you are still have to pay the VAT to HMRC for earlier period than registration date. Some traders in these situations tend to increase prices to allow for this without specifically stating that the amount charged is VAT and they may tell customers “why”. Once you’ve got your VAT number you can then reissue the invoices showing the VAT.

[Author]

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