Hello, Quick question, my client issued me with a P/O which was dated a month ago, they said I can back date the invoice if I so wish to speed up payment? The First Tier Tribunal (FTT) found that the misunderstanding of the company over whether the builders’ costs were for goods or services was genuine.Our policy on retrospective voluntary registrations stems from our interpretation of this paragraph, and has been confirmed by the Solicitor’s Office. Therefore the condition, ‘or from such earlier date as may be agreed between them’, would only operate if the trader who is seeking to obtain an earlier date is both However, this retrospection is restricted to four years from the date the application is received.This means that a trader who is already registered can not apply for retrospection.In effect, this means the business can then claim back VAT incurred up to eight years ago on goods still on hand on its first VAT return: by backdating the registration four years and then being able to go back another four years prior to the registration date.The provision to negotiate an earlier date of registration is contained in the VAT Act 1994.She told me that most companies have no problem with paying the VAT on a back dated an invoice. All of my clients are happy to pay the VAT backwards except one. Accountant did not tell me any cons or risks about back dating VAT. She recommended to back date it as I can "earn" some extra cash. I asked them if they could do it just before their VAT return date so that they would not have problem with cash flow. My accountant tells me that I can either swallow the loss which is quite substantial for me £1.6K. When I enquired HMRC about back dated VAT invoices they said that my client is not required to pay the VAT on a back dated invoice and so it's between my and my client. If the original invoice didn't say "VAT Registration applied for", then you have no case. And AFAIK you can't backdate VAT FRS to before the current accounting quarter. You can only charge VAT against a VAT invoice and without that qualification or a VAT number it isn't one. As Mal says, if you didn't indicate that there would be a VAT invoice at some stage in the future once you had a number, then there isn't much you can do. If you write to them, they have to write back to you.She told me that most companies have no problem with paying the VAT on a back dated an invoice. All of my clients are happy to pay the VAT backwards except one. You can only charge VAT against a VAT invoice and without that qualification or a VAT number it isn't one. Of course, if the client is also VAT registered, you could point out that this is a zero sum game - they pay you the VAT money, then they claim the VAT back, so they aren't losing anything by it. If you get a letter from HMRC which says "you must be paid the £1600 from Client A" and show that to the client, you may just force their hand. When you apply for retrospective VAT registration, you normally state in the date you wish the registration to start.
Clearly where an earlier date is requested then output tax should be accounted for on any supplies made.It is recommended that business checks with its customers prior to issuing VAT only invoices.However, if payment is not received, bad debt relief can be claimed after 6 months.HMRC should have considered this but did not, and so their decision not to allow the backdating was unreasonable.The provision for traders to negotiate an earlier date is contained in the VAT Act 1994, Schedule 1, 9.