Paying VAT before getting VAT number

[Welly]

Hi all!

I applied for VAT one month ago, due to turnover exceeding the threshold.
Now HMRC are telling me they would investigate into my aplication for at least another two months, because my company was chosen for additional checks. As if I was begging them to let me collect tax for them!

Anyway, the problem is they stressed that meanwhile I must account for and pay VAT.

I understand how to account for it (although I applied for FRS as well, I guess I would need to account for 17.5%).

But what I don't get is how to pay VAT if I don't have the VAT number yet?

Anyone been in these shoes before?

 

[David Richards]

In simple terms, you put your prices up to cover the amount of VAT that you'll need to account for. (But do not mention VAT on your invoices). And when you get your VAT number, you can re-issue proper VAT invoices.

There's a page on the HMRC website with all the info.

 

[Welly]

In simple terms, you put your prices up to cover the amount of VAT that you'll need to account for. (But do not mention VAT on your invoices). And when you get your VAT number, you can re-issue proper VAT invoices.

Right, but what do they mean by paying this VAT? Whom and in what capacity should I pay?

 

[Merchant UK]

In simple terms, you put your prices up to cover the amount of VAT that you'll need to account for. (But do not mention VAT on your invoices). And when you get your VAT number, you can re-issue proper VAT invoices.

There's a page on the HMRC website with all the info.

But surely, then the vatman can't claim this as the customer knows they are not paying vat, why should the business owner pay for this from their profits??? :|

If you get in trouble for saying its VAT before you get a number, why don't the VAT gang get in trouble for taking VAT from a customer who dosn't know they are paying an additional 17.5% vat

All one sided i guess :redface:

 

[MyAccountantOnline]

But what I don't get is how to pay VAT if I don't have the VAT number yet?

You account for VAT as if you are now registered, and once the registration number is issued you'll get a notice to complete a VAT return, and at that point you'll pay any VAT due to HM Revenue & Customs.

 

[MyAccountantOnline]

But surely, then the vatman can't claim this as the customer knows they are not paying vat, why should the business owner pay for this from their profits??? :|

When you are awaiting a VAT number you do still add VAT to your sales/charges.

 

[David Richards]

In simple terms, you put your prices up to cover the amount of VAT that you'll need to account for. (But do not mention VAT on your invoices). And when you get your VAT number, you can re-issue proper VAT invoices.

There's a page on the HMRC website with all the info.

But surely, then the vatman can't claim this as the customer knows they are not paying vat, why should the business owner pay for this from their profits???

It's not from the business owner's profits.

Let's say you sell something for £100 before registration. After VAT registration it will be £100 +VAT = £117.50. In the meantime you sell for £117.50 without mentioning VAT.

Non-VAT registered customers won't care, as they pay £117.50 either way. And VAT-registered customers won't care as they will be able to claim back the £17.50 VAT when you re-issue the invoice as a proper VAT invoice.

So (in that interim period, whilst waiting for the VAT registration to go through) the effect on the price customers pay and how much profit the business makes is nil

 

[Welly]

You account for VAT as if you are now registered, and once the registration number is issued you'll get a notice to complete a VAT return, and at that point you'll pay any VAT due to HM Revenue & Customs.

Great, thanks. So at least I won't be behind with my payments, even if they approve my application after the New Year.

I wonder what happens if they think I'm not worthy and turn me down? My turnover still being above the threshold, I'll find myself in quite a stupid situation.

 

[Merchant UK]

You account for VAT as if you are now registered, and once the registration number is issued you'll get a notice to complete a VAT return, and at that point you'll pay any VAT due to HM Revenue & Customs.

Its a bit odd Nicola, but say the sale of goods is B2B and the customer wants a Vat reciept you can't give them one, but you can still charge, not only will this make it hard for the business involved, they'll have to re do all the sales invoices with the new vat format, so that the customer can claim back their vat.

dependant on how long HMRC dilly dally with their numbers, the company in oarticular could lose sales as a result :|

 

[Merchant UK]

Great, thanks. So at least I won't be behind with my payments, even if they approve my application after the New Year.

I wonder what happens if they think I'm not worthy and turn me down? My turnover still being above the threshold, I'll find myself in quite a stupid situation.

If your turning over the Threshold limit and the vat man don't think your worthy then GOOD LUCK!!!

Earn as much as you want and never have all the hassle from the VAT mob at all.

Trust me you'll definately be worthy

 

[MyAccountantOnline]

Great, thanks. So at least I won't be behind with my payments, even if they approve my application after the New Year.

I wonder what happens if they think I'm not worthy and turn me down? My turnover still being above the threshold, I'll find myself in quite a stupid situation.

Its a crazy situation:|:|

If it helps in all my years as an accountant I've never actually seen an application refused, but have seen them take months to process one. It keeps some civil servants in a job.....

 

[Welly]

Trust me you'll definately be worthy

Then why on earth are they playing this circus with the additional checks?? I feel almost naked after all the questions they asked!

 

[MyAccountantOnline]

Its a bit odd Nicola, but say the sale of goods is B2B and the customer wants a Vat reciept you can't give them one, but you can still charge, not only will this make it hard for the business involved, they'll have to re do all the sales invoices with the new vat format, so that the customer can claim back their vat.

dependant on how long HMRC dilly dally with their numbers, the company in oarticular could lose sales as a result :|

I agree entirely - the delights of our tax system and those that run it

 

[roydmoorian]

So when you sell goods to a VAT registered business they will expect to be able to claim that VAT back, but you are unable to issue a VAT invoice without a VAT number but you are already charging the VAT inflated price ????

No business I know would buy from you under those circumstances

 

[David Richards]

Then why on earth are they playing this circus with the additional checks??

Fraud prevention and protecting tax revenues.

They want to make sure that you're not just going to claim back lots of fictitious input tax and disappear. Or charge your customers lots of VAT and fail to pay it to HMRC.

They may require you to pay a deposit if they think you're high-risk.

 

[Welly]

They may require you to pay a deposit if they think you're high-risk.

OMG!!!

 

[Merchant UK]

Then why on earth are they playing this circus with the additional checks?? I feel almost naked after all the questions they asked!

Call their bluff Welly, Write to them and tell them you want your number by return, otherwise you'll see it as said, for you to carry on without.

I knew a guy that had to wait over a year for his VAT number only to find out that he was registered, but they forgot to print out all the details and make his account live in the System.

he kept on calling the helpline only to be told it was on its way.

The whole system is flawed and run by people who accept no blame or wrongdoing.

 

[Welly]

No business I know would buy from you under those circumstances

That's why I kept my prices on the same level, didn't want to scare customers off.

 

[Merchant UK]

Fraud prevention and protecting tax revenues.


They may require you to pay a deposit if they think you're high-risk.

Protecting Tax Rvenues??? Surely they can get something right?? look at our fabulous Tax Credits System - One of the most flawed tax systems in the world, and we have prized donkeys running it!!

Hisk Risk??? Anyone who is in business is high risk according to the Tax office and Banks

Unemployed and on the dole, then your OK

 

[Merchant UK]

That's why I kept my prices on the same level, didn't want to scare customers off.

Thats why you need to set your Vat date from the time you recieve your vat number and not before

You can claim back later upto 6 months i think, before your vat registration for items used in the setting up of your business, it may be longer, you'd need to check

 

[Jeff FV]

Thats why you need to set your Vat date from the time you recieve your vat number and not before [my bold]

You can claim back later upto 6 months i think, before your vat registration for items used in the setting up of your business, it may be longer, you'd need to check

Can you do that? dots and spots will be going VAT registered before long, I've got my head round it (I think!) but one of the grey areas that still troubles me is the time between applying & becoming VAT registered, and invoices are issued before we go VAT registered, but are paid after we are registered. Just complications - I suppose I just need to bite the bullet & do it (going VAT registered voluntary as most sales are B2B)

Jeff

 

[Merchant UK]

Can you do that? dots and spots will be going VAT registered before long, I've got my head round it (I think!) but one of the grey areas that still troubles me is the time between applying & becoming VAT registered, and invoices are issued before we go VAT registered, but are paid after we are registered. Just complications - I suppose I just need to bite the bullet & do it (going VAT registered voluntary as most sales are B2B)

Jeff

Well legally you can't charge VAT untill you have a VAT number, so why pay them before hand, Cheeky beggers they are!!

 

[Welly]

Well legally you can't charge VAT untill you have a VAT number, so why pay them before hand, Cheeky beggers they are!!

But if they visit you one day and check your accounts and notice you didn't deduct VAT from your early sales?

 

[Merchant UK]

But if they visit you one day and check your accounts and notice you didn't deduct VAT from your early sales?

But its not vat, All you've done is increased your prices 17.5% As long as you don't put the vat percentage on your invoice, all you can do to claim back the vat from the arly sales is to re do the vat invoice once you have the number.

They do try it on, they want as much as they can from you in any which way, so just be careful, if an invoice dosn't show vat then they can't demand it from you (Before your registered!)

 

[Welly]

They do try it on, they want as much as they can from you in any which way, so just be careful, if an invoice dosn't show vat then they can't demand it from you (Before your registered!)

I'm not sure it would be legal, as they clearly say I need to pay the VAT starting from the date I should have been registered, not from the date I have been. :| No?

 

[David Richards]

But its not vat, All you've done is increased your prices 17.5% As long as you don't put the vat percentage on your invoice, all you can do to claim back the vat from the arly sales is to re do the vat invoice once you have the number.

They do try it on, they want as much as they can from you in any which way, so just be careful, if an invoice dosn't show vat then they can't demand it from you (Before your registered!)

The rules are clear, whether you agree with them or not.

As noted on the link that I and Nicola supplied earlier; "You become liable for VAT from the date you must be registered or asked for your voluntary registration to start, not the date that you actually apply for registration or the date you receive your registration number." That's why HMRC provided the advice about invoices in the meantime so that no-one is out of pocket.

You can, of course, ignore that advice. But failing to account for VAT that is due is fraud.

 

[David Richards]

I'm not sure it would be legal, as they clearly say I need to pay the VAT starting from the date I should have been registered, not from the date I have been.

That is correct.

 

[Merchant UK]

The rules are clear, whether you agree with them or not.

As noted on the link that I and Nicola supplied earlier; "You become liable for VAT from the date you must be registered or asked for your voluntary registration to start, not the date that you actually apply for registration or the date you receive your registration number." That's why HMRC provided the advice about invoices in the meantime so that no-one is out of pocket.

You can, of course, ignore that advice. But failing to account for VAT that is due is fraud.

so what happens when they dis-allow your application and you've collected all this vat which is hidden from your customers, is that yours to keep?? Or if they ask you for a large deposit which you can't afford, can you still keep that extra 17.5%?

adding 17.5% vat and not telling your customers is that fraud also?? especially as your not yet vat registered?? I may be looking at becoming vat registered so do i need to start increasing all my prices now or when i know for definate, I can't see how no one is going to be out of pocket, i'll lose custom if i up my prices 17.5% and the customers that pay will be 17.5% out of pocket

 

[David Richards]

so what happens when they dis-allow your application and you've collected all this vat which is hidden from your customers, is that yours to keep??

If you're a genuine business, you're not going to have your VAT registration refused. If your registration is solely to fiddle the VAT system; e.g. for the purposes of committing MTIC fraud (or 'carousel fraud') - then it will be refused. And if HMRC just think that you're somewhere in the middle, then they might ask for a deposit - in much the same way that you might ask a customer for a deposit, if you're not sure of their creditworthiness.

Or if they ask you for a large deposit which you can't afford, can you still keep that extra 17.5%?

So being realistic, if you have reached the compulsory registration threshold and you're not a fraudster, you're not going to have your registration request refused are you?

I think you're looking for a problem that doesn't exist. Thousands of businesses every year manage to follow the process without incident.

 

[paulears]

I really can't see why this is such a big deal - from your registration date you add 17.5% to your invoices, assuming you're not going to absorb it, but at the same time, you can benefit from the tax portion of all your suppliers invoices, so it's not really a loss of 17.5% just the difference between input and output tax - which is your profit proportion.