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My turnover has only increased each month over the past year and im now close to £80k annual turnover. I’m about to sign some contracts which will double my turnover or so. Just checking the rules of when i need to register and when VAT starts being charged.
Hi
VAT registration is either: (i) compulsory – historic or futuristic or (ii) Voluntary – existing or intending trader.
Historic – If your turnover (excluding exempt supplies) in the past 12 months (on a rolling 12-month basis) exceeds £85,000, you are required to register for VAT, must notify HMRC within 30 days. Notification to HRMC must be made within 30 days from the end of the month in which the registration threshold was exceeded. The registration will take effect from the first day of the second month when the limit was exceeded. For example, you exceed threshold in April, Must notify HMRC by 30 May, Effective date of registration will be 1 June.
Futuristic – If you believe that the value of taxable supplies in the next 30 days alone will exceed the VAT registration threshold, then the business must notify HMRC within 30 days.
The registration on this future test does, however, have an immediate effect. It means all supplies after the date the registration should be effective are deemed to include VAT, whether explicitly charged or not. This future test is really to catch substantial orders. For example, you sign a contract today that will see your turnover exceed £85,000, you must notify HMRC within 30 days from today and you must be registered for VAT from today. The VAT number will be issued later.
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 the trader is 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. However, you’ll still have to pay the VAT to HMRC for this period. You should increase your prices to allow for this without specifically stating that the amount charged is VAT and you tell your customers why. Once you’ve got your VAT number you can then reissue the invoices showing the VAT.
Quote:Hi, I would like to understand the treatment for UK issued Sales Invoices for services to a US domiciled client. I am aware that these are Outside the Scope of UK / EU VAT and no VAT applied on the invoice, but when completing a UK VAT return how should they be accounted for from an Input Tax Recovery Position? Should these be classed as Exempt or Exempt RTR? Many thanksVAT services to outside EU are outside the scope of VAT and hence no VAT is charged. With outside the scope of VAT, means such services would be left out of your VAT return completely.
Posting letters or parcels with Royal Mail is exempt from VAT (unless you’re recharging those costs), however, other couriers or delivery costs charged by delivery companies are subject to VAT.
Depends what the products are eg insurance….please see https://www.gov.uk/hmrc-internal-manuals/vat-taxable-person/vtaxper36820
A pure agent/principal relationship should be established and invoice should ideally identify the ultimate beneficiary. That way you only pay VAT on your commission (if applicable).
i would get a VAT expert to look at the agreements/invoices etc if the amount involved in large enough.
Purchases from other EU states should be free of import duty and VAT (but buyer accounts for VAT in box 2 of VAT return and additionally box 4 if recoverable).
Purchases from outside EU in most cases carry import duty at rates dictated by the EU plus VAT at the appropriate rate. Unless a deferment arrangement is in place the duty and VAT have to be paid to HMRC before goods are released to the buyer.
If the supplier has a UK reg number then you treat it like any other UK supplier ie claim input VAT. The invoice must clearly show the input VAT.
You can apply for a registration ‘exception’ if your taxable turnover goes over the threshold temporarily. Write to HMRC with evidence showing why you believe your VAT taxable turnover will not go over the deregistration threshold of £83,000 in the next 12 months.
The place of supply for business to business transactions (B2B) is the place where the business customer ‘belongs’. Hence services to EU businesses, the place of supply is where the business customer ‘belongs’ ie German in your case, hence VAT should not be charged but the sales is included in the EC sales list.
To qualify for reduced rated renovations and alterations on residential property is that the property must have been unoccupied for the previous 2 years. The contractor/supplier can only charge the reduced rate of VAT if you can prove that nobody has lived in the property for at least 2 years, otherwise they will charge you VAT at 20%.
The best evidence is a letter from the “Empty Property Officer” at the local council confirming that the property hasn’t been lived in during the 2 years concerned. HMRC says this is sufficient evidence to confirm that the property qualifies under the “2 year unoccupied” rule. You can look for other evidence from the local electoral and council tax records and other sources such as utility companies. HMRC usually accept a combination of such evidence.
As from 1 October 2012 VAT at the standard rate (20%) applies to all materials and services supplied in the course of approved alterations to listed buildings or scheduled monuments. Previously the cost of approved alterations was zero rated for VAT.
sorry – my advice is to get an accountant as you seem to have a number of issues wrong and possible errors on your reports.
If you require further assistance with your accounts and tax – please do not hesitate to contact me, my rates are competitive.
My email address: [email protected]
You need to register for VAT if you believe that the value of taxable supplies in the next 30 days alone will exceed the VAT registration threshold, then the business must notify HMRC within 30 days.
The registration on this future test does, however, have an immediate effect as you correctly pointed out. It means all supplies after the date the registration should be effective are deemed to include VAT, whether explicitly charged or not. This future test is really to catch substantial orders. Consequently, you must notify HMRC within 30 days from today and you must be registered for VAT from today. The VAT number will be issued later.
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 the trader is 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. However, you’ll still have to pay the VAT to HMRC for this period. You should increase your prices to allow for this without specifically stating that the amount charged is VAT and you tell your customers why. Once you’ve got your VAT number you can then reissue the invoices showing the VAT.
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.
Hi there
VAT is a tax on goods used in the UK and EU, so if goods are exported outside the UK and EU, you do not charge VAT. You can zero rate the sale, as long as you get and keep evidence of the export, and comply with all other laws. You must also make sure the goods are exported, and you must get the evidence within 3 months from the time of sale. This can be longer for goods that need processing before export and for thoroughbred racehorses.
The time of sale is the earlier of the day you:
- send the goods to your customer
- get full payment for them
You must not zero rate sales if your customer asks you to deliver them to a UK.
Post Brexit – nothing changes for the next 12 months and then a review of the rules will be made.
