VAT - Registering for the Flat Rate Scheme

[Kate Powell]

I am a new company and at the moment I am not registered for VAT as I don't expect to meet the threshold over the year. However, I have just found out that I can voluntarily register for the flat rate VAT scheme and this would make me better off. I have got a couple of questions:

Firstly, can I back date the day I join the scheme to Feb 2010 so I can receive the benefit all the way through? And what reason should I give for not registering earlier

Secondly, what do I need to do to resubmit the invoice to my client who has already paid me? I am trying to find out if the client I have been invoicing is happy to pay additional VAT on the invoices they have already paid. Apart from my VAT number, do I have to resubmit the entire invoice and just put on the invoice that £x has already been paid and give a balance due? Or is it more complicated than that?

[David Griffiths]

I'll ignore the reply in post #2 as it is a prime candidate to be deleted

You can backdate VAT registration up to four years, and don't need to give any reason. You will be required to account for VAT on all supplies from the date of registration. That can be on the flat rate scheme, and you should send in your application for the scheme with your registration application.

You say that you will be better off if you register, so I presume that most, if not all, of your supplies are to other registrered traders. If you are supplying the general public then your assumption may well be wrong. You can certainly go back to your customer and ask if they will accept a supplementary invoice for VAT on the first supply. They are by no means obliged to accept, but if they are registered then they will be able to recover the tax. If they are not registered, then they can, should and probably will give you a two word answer.

You can simply raise an invoice along the lines of "VAT charge in respect of supply of XXX per invoice YYY dated XX/YY/2010

There is absolutely nothing wrong with retrospective registration, provided that you are fully aware of the liabilities that it brings. HMRC have set the rates at a level which is broadly tax neutral - some people gain by being on the scheme. Others would lose, so they don't choose it.

[Williams lester]

Have you actually asked your accountant to calculate the figures to see how much better off you will be under flat rate? If not, it is worth doing that first.

[MyAccountantOnline]

Hi Kate

Just a quick thought you mention back-dating the VAT registration - are you aware that you can claim some VAT back before the date of registration? It may, or may not be appropriate, particularly if you are going to use the flat rate but if it is of interest have a read here - http://www.hmrc.gov.uk/vat/start/register/purchases-before.htm