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Re: Prepayments redux

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