Vat increase and invoicing

[ThePerfectOffice]

Hi there,
Apologies if this has been asked before. I did search and either my search skills are rubbish for I couldn't find an answer..

I have just sold a £60k job but the client (fully checked out) has asked to spread the payments as follows..

£10K immediately

£10K to be paid by end of December

£20K to be paid by end of Jan 2010

£20k to be paid by end of Feb 2010

They want have all the invoices in this month to avoid the New Year increase.
Is this OK to do?

Many thanks.

 

[Mike Ward]

When are you going to deliver the service / goods ??

 

[pressme]

Should be ok, but YOU may have to pay the VAT immediately depending on how you are VAT registered. Most small businesses are registered for VAT on payment rather than invoice.
Note that I am not a VAT expert and you probably run it past your accountant to be sure.

 

[ThePerfectOffice]

Hi thanks for your replies.

Mike, I'm hoping the work will be completed before the end of the year.

Pressme, we only pay vat (quarterly) after we have received payment from them - and the date of the invoice determines the vat rate.

This is a business to business sale. Everything we do is invoiced and normally on 30 credit terms.
Thanks

 

[Jenni384]

If you complete the work in December, there is nothing wrong with invoicing in December for the full amount at 15% VAT.

If you are on standard VAT accounting, you will pay the full VAT over on your next VAT return.

If you are on cash accounting, you will pay the VAT over as you get paid. I think this will still be at 15% but I'm not sure as I've not come across it yet.

Ask your accountant which scheme you are on if you're not sure.

 

[Mike Ward]

Yes I agree if the work has been delivered in December then the VAT should be accounted for at 15% and either in that month/quarter if you are not on a cash scheme and when received if you are on a cash scheme

Mike