Re: Prepayments redux

[Ed W <..hidden..>]

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.

I have a VAT inspection taking place right now, I will ask the inspectors for an opinion when they are finished

Cheers

Ed W