VAT Invoicing and keeping track internally

[Carl Hague]

Hi everyone, my query is less about VAT, more about keeping track.

I work on an hourly rate for a number of different clients, i record that time, and bill them accordingly.

I have admin support who takes my hours and drafts invoices for me. Sometimes i alter those invoices or sit on them for a little while longer until a project is complete.

An invoice (say 24-005) might not be completed and sent out until the works are completed a month or so later, and in that time several other invoices might have gone out the door (Say invoice 24-006, 24-007, 24-008)

Will the incorrect numbering and dates cause me issues in the future?

 

[Ozzy]

I can answer your question, and then give some advice.

Answering your question specifically (and reading your comment that this is less about VAT) then no it won't cause any problems ignoring VAT.

However my advice is to have a qualified bookkeeper do this for you, or meet and discuss with your accountant, because I do see a possible VAT issue for you.
If you are raising the invoices but not sending them out then you are accounting for VAT which you have not received yet, and if you edit the invoices between VAT periods you could be messing your VAT returns up. I would suggest look at sending pro-forma or WIP reports to your clients if you need to; or consider not finalising invoices in your accounting software and some software may treat this as 'quotes' that you later convert to invoices to issue.

Basically, my advice is don't raise the invoices until you are ready to send them out.

 

[Carl Hague]

I can answer your question, and then give some advice.

Answering your question specifically (and reading your comment that this is less about VAT) then no it won't cause any problems ignoring VAT.

However my advice is to have a qualified bookkeeper do this for you, or meet and discuss with your accountant, because I do see a possible VAT issue for you.
If you are raising the invoices but not sending them out then you are accounting for VAT which you have not received yet, and if you edit the invoices between VAT periods you could be messing your VAT returns up. I would suggest look at sending pro-forma or WIP reports to your clients if you need to; or consider not finalising invoices in your accounting software and some software may treat this as 'quotes' that you later convert to invoices to issue.

Basically, my advice is don't raise the invoices until you are ready to send them out.

Ozzy,

Thank you for getting back to me.

I should say that invoices are drafted in Xero, but not necessarily approved and sent.
If, like you state above, i did approve them then i would fully expect VAT issues.

If we do not approve them, do the dates and numbering really matter (as long as we are able to track them)?

We work on a cash accounting basis.

I agree, we don't normally raise an invoice until we are ready to send it, but sometimes an extra phone call creeps in, or a few hours extra work.

Invoices could always be tidied up before any sort of year end or VAT period.

 

[Ozzy]

If we do not approve them, do the dates and numbering really matter

Numbers no, dates yes.

 

[Carl Hague]

Thanks Ozzy, that helps a lot.

We'll tighten up our internal processes, but you have eased my mind about the (hopefully few) times that this might happen.

 

[MyAccountantOnline]

Hi everyone, my query is less about VAT, more about keeping track.

I work on an hourly rate for a number of different clients, i record that time, and bill them accordingly.

I have admin support who takes my hours and drafts invoices for me. Sometimes i alter those invoices or sit on them for a little while longer until a project is complete.

An invoice (say 24-005) might not be completed and sent out until the works are completed a month or so later, and in that time several other invoices might have gone out the door (Say invoice 24-006, 24-007, 24-008)

Will the incorrect numbering and dates cause me issues in the future?

Crikey that sounds a lot of unnnecessary work and potential for issues.

Why not just invoice all work done each month?

If you only want to invoice on completing work you shouldn't be creating an invoice before then and holding/amending it.

 

[Carl Hague]

Crikey that sounds a lot of unnnecessary work and potential for issues.

Why not just invoice all work done each month?

If you only want to invoice on completing work you shouldn't be creating an invoice before then and holding/amending it.

Thank you, we do try to invoice each month, and i think that's the way we'll have to do it going forwards.

 

[MyAccountantOnline]

....

Will the incorrect numbering and dates cause me issues in the future?

Possibly.

A VAT invoice is required to have a sequential number based on one or more series which uniquely identifies the document.

If HMRC inspect your records its going to look odd that your invoices aren't being issued in order and may well raise questions and issues with the date of supply and when you should be accounting for VAT.

 

[MyAccountantOnline]

Thank you, we do try to invoice each month, and i think that's the way we'll have to do it going forwards.

I think you'll find it alot easier and it's good for cashflow too.