Vat and Finance

[redfizz]

Hi to all who read this.

I am selling products via self financing, this involves me selling £200 worth of goods but taking payments for it weekly over 6 months.

Do I have to pay the full amount of VAT on the £200 straight away even though I wont receive this £200 in full until the 6 months have passed, or can I pay the VAT on the amounts I receive as I receive them?

Any advise is greatly appreciated.

 

[Scalloway]

If you opt to use cash accounting you only pay VAT as the cash is received. This also means that you can only claim VAT on your expenses as they are paid.

HMRC advice

http://www.hmrc.gov.uk/vat/start/schemes/cash.htm

 

[DeanCo]

The date you have to account for VAT for supplying goods/services is the date of the tax point. There are several forms of tax point and you have to be sure to get it right and put the transaction on the correct VAT return.

If you allow customers to make payments over an extended period by making instalments, the tax point should be when you supply the goods/services and this is when the VAT should be accounted for.

 

[MyAccountantOnline]

If you opt to use cash accounting you only pay VAT as the cash is received. This also means that you can only claim VAT on your expenses as they are paid.

HMRC advice

http://www.hmrc.gov.uk/vat/start/schemes/cash.htm

I agree with this advice - most small businesses I see use cash accounting.

 

[David Griffiths]

The date you have to account for VAT for supplying goods/services is the date of the tax point. There are several forms of tax point and you have to be sure to get it right and put the transaction on the correct VAT return.

If you allow customers to make payments over an extended period by making instalments, the tax point should be when you supply the goods/services and this is when the VAT should be accounted for.

Unless you are cash accounting, as the first respondent said

 

[aapkae]

totally agree with what sacalloway said