Backdate VAT - invoice

[AshleyT]

Hi there,
I need to backdate my VAT and note that all my clients are VAT registered so there should have been no VAT paid anyway. We've been going for 2 years and want to backdate to the start.

Does this mean I need to email them and ask them to pay 2 years of VAT?

Also, in the future - will clients need to pay the VAT to me and claim it back? Or if we are both registered is VAT just ignored?

Thankyou

 

[Scalloway]

Does this mean I need to email them and ask them to pay 2 years of VAT?

Yes

will clients need to pay the VAT to me and claim it back? Or if we are both registered is VAT just ignored?

You add VAT to your invoices. Your suppliers continue to charge VAT on their's. Every 3 months you account to HMRC for the difference.

 

[Hash and Bash]

Also, in the future - will clients need to pay the VAT to me and claim it back? Or if we are both registered is VAT just ignored?

You don't "ignore" vat on B2B sales.
If the buyer is in the UK, you need to charge VAT on sales.
If the buyer is in another EU country (and supplies their vat number) you use the 'reverse charge' system to account for vat.

 

[AshleyT]

You don't "ignore" vat on B2B sales.
If the buyer is in the UK, you need to charge VAT on sales.
If the buyer is in another EU country (and supplies their vat number) you use the 'reverse charge' system to account for vat.

Is this the case if they are a charity or university?

 

[MyAccountantOnline]

Why do you need to back date your VAT registration to 2 years ago?

.. note that all my clients are VAT registered so there should have been no VAT paid anyway. ...

Not quite sure what you mean?

 

[lesvatadvice]

If you have to back dated your VAT registration, then you can issue VAT-only invoices to customers, which they can reclaim. Provide a covering letter to explain this, and turn it into a promotion, not an apology!
And you can reclaim two years of VAT input tax.

 

[Mr D]

Is this the case if they are a charity or university?

You charge VAT on all sales except the ones you don't - such as EU businesses with VAT number given to you.
Charities get a reduction in some business rates, they don't get away from business practices.

 

[TheCyclingProgrammer]

You charge VAT on all sales except the ones you don't - such as EU businesses with VAT number given to you.
Charities get a reduction in some business rates, they don't get away from business practices.

If you are selling services to an EU business you don’t need their VAT number unless they have one. You just need evidence that they are in business.

Only sales of goods to EU businesses require a VAT number before you can zero rate them.

 

[spidersong]

Have you checked this is alright with your customers??

You mention that your customers may be in the charity and university sector, lots of the people in this sector don't get to recover all their VAT even if they may be VAT registered. So if you do this assuming they'll be happy to pay it and claim it back you might find yourself being told to take a long walk off a short pier.

And occasionally the charity status of a recipient may make a difference to the VAT you charge (advertising, some building works etc.) what is it you actually do for them, as that may tell us a) whether you would charge them VAT and b) whether they are more or less likely to be able to claim it back.

 

[TheCyclingProgrammer]

Unfortunately I don’t think you have any automatic right to go back to customers and ask them to pay you anything more because as far as they are concerned their liability to you is settled. I assume you gave them no advance notice that you would be registering for VAT and backdating it.

A VAT registered business may be willing to pay a VAT only invoice as they will simply recover it on their VAT return (in most cases, assuming they are able to recover VAT) but others may not.

You do have course have to account for VAT on these sales but you should be prepared to have to absorb the VAT by treating the price paid as the gross amount. You will also need to reissue valid VAT invoices to reflect this.