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VAT on long term agreement

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Pradip Rajah

Dear all

I hope someone can help.

If I raise an invoice for say, £100k plus VAT to a customer and he has agreed to pay this over 2 years, can:

Q1- he claim vat on the full £100k in the quarter the invoice is raised?

the customer is a local govt council.

Prad
 
Depends on how customer is set up for VAT purposes, cash or invoice accounting?

Why would you raise an invoice and wait for payment over 2 years? Are you providing him with credit, in which case watch the law covering credit and need to be registered.

Surely raising an invoice in stages to represent work/goods supplied to that date is more appropriate.

As you give little detail it is hard to say.

Jason
 
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If a customer receives a VAT invoice he can reclaim the VAT in his next VAT return (accruals accounting) or when he pays the invoice (cash accounting).

Conversely, the business who issues the invoice will have to pay over the VAT to HMRC on their next VAT return regardless of whether it's been paid (accruals) or pays it over when it gets paid (cash accounting).
 
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