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Re: Prepayments redux
- Subject: Re: Prepayments redux
- From: Ed W <..hidden..>
- Date: Fri, 03 Apr 2009 11:47:46 +0100
John Bell wrote:
The VAT rules aren't too bad once you get used to them.
From the UK VAT guide
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?