Paying VAT? Charging VAT?

#1
Short query

I've had an invoice from a business which isn't showing a VAT number let alone a registration number as a Ltd company, so basically charging 20% for goods recieved

As a newly registered limited company I'll shortly be needing to get VAT registered due to reach the threshold, so I'll obviously be wanting to claim that back.

Few questions for people in the know

a) Do you have to be VAT registered to charge VAT?
b) Do you have the right to claim a VAT reciept/invoice with any reciept?
c) Do you not have to be a registered business to charge VAT?

I have a feeling the fella is basically simply trying find an excuse to charge extra and pocket the amount, after searching for the business is it simply showing as a dissolved company as well...
 
#2
You can only charge VAT if you are registered for VAT - AFAIK individuals can register as well as businesses.

You cannot charge or show VAT until you have a registration number.

I recall on the advice of my accountant I had to have my VAT number on invoices.

It is all here, the Govt. for all its foible does a good job of publishing the legal requirements for business ---> Business tax - GOV.UK

As for the dodgy invoice you received - tell him you NEED his VAT number in order to be able to pay him VAT. Just hold back the VAT amount. And you can drop him in it by giving HM Revenue and Customs (HMRC) a call to ask if the business is registered as he is charging VAT.
 
#4
I always check if a company is VAT registered before even approaching them.

Just makes sense.


MB
Well at the moment I run a small retail business but now looking to expand and I'd rather start squeeky clean rather be shafted as my brother who runs his own business says "you don't want the tax man after you"
 
#5
You can only charge VAT if you are registered for VAT - AFAIK individuals can register as well as businesses.

You cannot charge or show VAT until you have a registration number.

I recall on the advice of my accountant I had to have my VAT number on invoices.

It is all here, the Govt. for all its foible does a good job of publishing the legal requirements for business ---> Business tax - GOV.UK

As for the dodgy invoice you received - tell him you NEED his VAT number in order to be able to pay him VAT. Just hold back the VAT amount. And you can drop him in it by giving HM Revenue and Customs (HMRC) a call to ask if the business is registered as he is charging VAT.
Wot he said! ^^^
 
#7
You don't have to be a company nor do you have to be trading at or above the threshold. A sole trader can register for VAT and some do just to appear 'big' to corporate clients. Modern accounting software makes VAT management a doddle, plus you get to keep the money until each quarter's end, earning a few quid of interest.
 
#8
You don't have to be a company nor do you have to be trading at or above the threshold. A sole trader can register for VAT and some do just to appear 'big' to corporate clients. Modern accounting software makes VAT management a doddle, plus you get to keep the money until each quarter's end, earning a few quid of interest.
Nice suggestion,

I'm guessing you have to input all transactions however through manual data entry?...

I'll be basically flogging on Amazon as well eBay as well as a dedicated site, will it take all fees etc into account?

Anyone recommend some decent software?
 
#9
Another point is if I withhold the VAT because he doesn't have a VAT number... can he come back later to attempt to claim it if he wasn't VAT registered in the first place?
 
#10
Well at the moment I run a small retail business but now looking to expand and I'd rather start squeeky clean rather be shafted as my brother who runs his own business says "you don't want the tax man after you"
Once you are on the radar of HMRC they will poke you just to see what happens.

Tip: The BiL, now retired, was a chartered accountant, he told me that if HMRC ping an accountant as a 'wrong un' they will keep an eye on the accountants customers for likely tax irregularities too.
 
#11
Another point is if I withhold the VAT because he doesn't have a VAT number... can he come back later to attempt to claim it if he wasn't VAT registered in the first place?
The way it works:

1. If a business reaches the threshold, or (best advice) looks likely to reach the threshold, they have to register for VAT with HMRC. As stated above you can register for VAT anyway just because you want to put an impressive VAT number of your paperwork.

2. You are collecting the VAT on behalf of the government, it is not the businesses money.

3. If anyone is trying to collect VAT when not registered then they are breaking the law. So this blokes invoice is an illegal fiction.

3. (a.) It is like the old scam of people (the broken nose brigade from Lahndun) on Jersey and Guernesey advertising in the UK charging VAT on the items being sold - the favourite used to be gold. The gold was VAT exempt on the islands, they would advertise the gold for sale on the mainland with VAT and pocket the [back then] 17% which starts to add up on 500 quid gold coins.
 
#12
Nice suggestion,

I'm guessing you have to input all transactions however through manual data entry?...

I'll be basically flogging on Amazon as well eBay as well as a dedicated site, will it take all fees etc into account?

Anyone recommend some decent software?
There are more than a few out there, and my experience is it comes down to personal preference. I'm using Xero (cos it lets me do my reconciliation on my phone whilst I'm being idle on a train or in a queue), but others swear by Sage or Quicken. They all cost money but then again so does my time. Overall, it saves two days of my time every quarter for less than an hour's fee, so I win and the accountant is all set up for it.

As far as handling fees are concerned, just set up an account in the package and reconcile all fees to it. That line will then be allocated by your accountant against the cost of doing business.
 
#13
My business has been VAT registered for nearly 10 years, and since the start, all my invoices clearly carry the VAT registration number, along with a column for adding the VAT to the final bill. Yes, you have to be registered to charge VAT..
 
#14
When you register for VAT, you can, dependent on your business do "Flat-Rate".
My company is registered for VAT, but as I am effectively selling my services and purchase very little in support of this, I registered for Flat-rate. This means that at the end of the quarter, I pay HMRC only 80% of the VAT monies I have collected, and keep the remaining 20% (4 pence per £1 of services). The flat-rate percentage varies dependent on your business, but it makes life easier for me.
 

AlienFTM

MIA
Book Reviewer
#15
Apropos of nothing.

Admiral Computing (no relation to Admiral sportswear or Admiral Insurance, @Tedsson can explain further) won the bid to write the default PC client front end and the (Tandem) mainframe back end for the Bank of England's Crest paperless share trading system.

So it was that in early 1995 i rocked up at the Bank's computer centre opposite St Paul's Cathedral. I was greeted with a 5-minute induction that went like this. "We won the contract with a good bid, but the Bank, on their part, forgot to take VAT into consideration. As a consultancy, we are liable for VAT. The Bank have found a way around it. For the next however many months, you are not a consultant, but a Bank of England employee. Nothing changes."

So there you have it, even the Bank of England can find a way to be creative with VAT.
 

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