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hi all
I’m about to quote a job that will see me land in the ‘must be vat registered’ pool due to the size of the quote.
I’m a sole trader and was previously registered just over four years ago before coming off the scheme.
I’m about to quote a job valued between £100,000 to £120,000 (40k in costs to me at parts), I’m not currently registered for VAT and my main issue is most of my work is for private home owners (who tend to prefer thinking their saving money by not going with VAT registered companies) but I occasionally work for a few big firms and this job in particular is large.
Do I have to be VAT registered before sending the quote over as +VAT to this client (or do i send it as +VAT before registering whilst I continue all my other works as non VAT then if I hear back from them with a go ahead on the works I sign up to VAT before making any purchases or taking any payments from the client)
Apologies if this is a very confusing read!
My wife has always done my accounts and dealt with things like this but she has secondary breast cancer and is no longer able to help (its also why I’m considering one larger job as opposed to all my normal smaller works).
thanks all
You need to register for VAT if you believe that the value of taxable supplies in the next 30 days alone will exceed the VAT registration threshold, then the business must notify HMRC within 30 days.
The registration on this future test does, however, have an immediate effect as you correctly pointed out. It means all supplies after the date the registration should be effective are deemed to include VAT, whether explicitly charged or not. This future test is really to catch substantial orders. Consequently, you must notify HMRC within 30 days from today and you must be registered for VAT from today. The VAT number will be issued later.
While it is tempting to issue VAT invoices with ‘VAT number applied for’ instead of a VAT number, this is technically in breach of the law. No mention can be made of the amount of VAT charged unless the trader is registered, and at the date of issue of the invoice, you are not.
Therefore you can’t charge or show VAT on your invoices until you get your VAT number. However, you’ll still have to pay the VAT to HMRC for this period. You should increase your prices to allow for this without specifically stating that the amount charged is VAT and you tell your customers why. Once you’ve got your VAT number you can then reissue the invoices showing the VAT.
If you require further assistance with your accounts and tax – please do not hesitate to contact me, my rates are competitive.
My email address: [email protected]
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