The VAT rules aren't too bad once you get used to them.

 From the UK VAT guide
"14.2.3 Deposits
Most deposits serve primarily as advance payments and will create
tax points under 14.2.2(a) when you receive them."

The general rule is that a tax point (the time at which you need to  
account for the tax) is created a) when you issue a VAT Invoice or b)  
When you receive payment - whichever happens first.

i.e. you have to account for VAT at the time when the prepayment is  
received. This also requires the issue of a VAT Invoice. A credit memo  
would not do this.

rgds
John Bell

Quoting John Hasler <[email protected]>:

> I just found what I think is the relevant regulation:
> <http://www.opsi.gov.uk/si/si1995/Uksi_19952518_en_4.htm>  Remarkable
> document.  Your government really doesn't want you in business without a
> full-time accountant on staff, do they?  Oh, well.  We can look forward to
> similar levels of "regulation" soon as a well.
>
> In any case, in the absence of advice from a British accountant I'd send
> the pre-payer a credit memo containing all the stuff the regulation appears
> to require.
> --
> John Hasler
> [email protected]
> Elmwood, WI USA
>
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>




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