Ed W wrote:
Ed W wrote:
John Bell wrote:
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.
I had always read that to mean that when you finally raise the invoice
the tax point needs to be the tax point as defined by a bunch of rules
which boil down to the sooner of a) money received and b) invoice
raised. I had not read it that the invoice NEEDS to be raised at the
point you receive the prepayment though?
Ed W
Yeah, check provision 5 on your link.
"The documents specified in paragraphs (1), (2), (3) and (4) above
shall be provided within 30 days of the time when the supply is
treated as taking place"
I think this is designed to give some leeway on rearranging the order
of events to meet reality. I guess what they are trying to avoid is
people artificially *delaying* the invoice date. They have a whole
bunch of provisions which are designed to bring the invoice date
forward in time, and I guess this one is designed to avoid then
springing these invoices on people years later.
This is not an official opinion, but the VAT inspectors we had around
gave the following top level guidance:
- The intention of the provisions referenced are to bring forward the
dates on invoices are far as possible, roughly speaking the tax point
date will be the earliest of the payment and the date the invoice is raised
- Additionally they are trying to avoid people incuring invoices and
then being presented with them a significant time later, hence the 30
day provision
- The 30 day provision gives some leeway for prepayments to avoid having
to raise duplicate invoices constantly
- Where there is a real deposit and a delay before the actual purchase
it would generally be correct to raise an invoice against a "deposit"
item which was charged at expected VAT rates. When the final invoice
was raised you would simply credit the deposit invoice and net off
against the final invoice.
- However, for shorter gaps between payment and purchase the inspectors
didn't see a problem with other sensible internal procedures to track
the pre-payment. Important point though that when the invoice is
finally raised it should be for the date the prepayment was taken, not
todays date
- I didn't ask, but speculate, that where you use the more common
procedure of authorising a credit card and not taking payment
immediately, presumably there is not yet a prepayment and so you can
delay raising any invoices - however, it would still be useful to track
this thing which is very close to a payment through the system and
ensure it doesn't get lost or missed
So at least for many smaller companies in the UK - small timing
differences between collecting and raising invoices can be handled
through internal procedures and there is no requirement for doubling up
invoices. I can't say that I have ever seen ebuyer or amazon do a
different process either...
Ed W
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