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Posted Wed, 11 Oct 2023 08:57:51 GMT by
We are a small partnership of semi-retirees undertaking part time property consultancy. Turnover is always less than £20k pa. However we are currently working on a project where the fee would exceed the VAT threshold. If successful the fee would be received in around 8 to 12 months. There will be no real certainty until 3 months before the fee is due (and even then a judicial review of the town planning process could be lodged, which could see the transaction seriously delayed or even fail). Online guidance is confusing. I have seen suggestions that any invoice you have submitted 12 months before the registration date will be subject to VAT (which you either try to collect from clients or have to pay from income received), but other conflicting advice says that VAT should only be charged from the effective registration date, which would be the date when you know with a reasonable degree of certainty that you will go over the threshold (in our case around 3 months before the likely date of legal/financial completion of the transaction). My question is whether we should warn clients that we may in future have to add VAT to invoices currently being submitted, or can I be confident that we will not have to charge backdated VAT on any invoices submitted before the effective date of registration? As an aside, this could be a one-off deal and I did wonder about seeking an exception so we do not have to register, but we are also working on a second similar deal and either would exceed the threshold. After this the partnership is due to be dissolved for retirement, but given the possibility of two transactions exceeding the threshold I do not think that conditions for an exception would be met. TIA for advice.
Posted Tue, 17 Oct 2023 09:46:08 GMT by HMRC Admin 8 Response
Hi,
Businesses must start keeping records and accounting for VAT from the date they become liable to register.
It may be advisable to let your clients know VAT could be included in your invoices should you become VAT registered.
Guidance on when to register and what the effective date of registration may then be can be found in notice 700/1 section 4 
You would need to look at the tax point for the supply to determine whether it would be subject to VAT if this falls after your effective date of VAT registration.
Guidance on tax points can be found in notice 700 sections 14-15 
Thank you.

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