How JustAnswer Works:
  • Ask an Expert
    Experts are full of valuable knowledge and are ready to help with any question. Credentials confirmed by a Fortune 500 verification firm.
  • Get a Professional Answer
    Via email, text message, or notification as you wait on our site.
    Ask follow up questions if you need to.
  • 100% Satisfaction Guarantee
    Rate the answer you receive.
Ask bigduckontax Your Own Question
bigduckontax
bigduckontax, Accountant
Category: Tax
Satisfied Customers: 3823
Experience:  FCCA FCMA CGMA ACIS
75394688
Type Your Tax Question Here...
bigduckontax is online now

I own a UK limited company which provides software and software

Customer Question

I own a UK limited company which provides software and software services, no hardware. I am about to become part of a Joint Venture Partnership is the USA with a company which is registered in the USA. This partnership will be selling copies of one of my software products and transferring my share of the revenue from the US bank account to my company's UK bank account as and when payments are received. Do I record each payment received in my UK accounts as a sales invoice? I cannot raise an invoice prior to receiving payment as I won't know when a payment is made or for how much until it appears in my bank account. Also, I won't need to send the US partnership an invoice before they transfer funds to me.
Submitted: 3 years ago.
Category: Tax
Expert:  bigduckontax replied 3 years ago.
Hello, I'm Keith and happy to help you with your question.

Perfectly acceptable given the environment in which you are operating. Just raise the invoice once you know the amount coming in. Over the months it will all smooth out. Book keeping entries are merely Debit Cash/Bank, Credit Sales. A purist would say that each sale should be estimated and posted (Debit Debtors, Credit Sales) and when the settlement comes in Debit Cash/Bank and Charges, credit Sales. Then when the account period closes you would have to make an adjustment to correct estimates to actuals. What a palaver. Frankly it's a exercise in financial futility. It's rather like estimating telephone charges at the end of each account period. Why bother, the bills will come in quarterly so will even out in the end.

The solution you propose is an excellent rough and ready twist of the spoon to stop the treacle running off so to speak!

I appreciate that these are exports and zero rated for VAT. However, if you have substantial input VAT which you are not reclaiming registration might be to your advantage cash flow wise.

I do hope I have solved your dilemma for you and put your mind at rest.
Customer: replied 3 years ago.

If the amount of zero-rated income takes me over the VAT threshold for any one year, will I still have to register for VAT?

Expert:  bigduckontax replied 3 years ago.
The Government web site is specific and I quote:

'The threshold is based on your VAT taxable turnover - the total value of everything you sell or supply that isn’t VAT exempt.'

Thus if your turnover approaches or exceeds 81K you must register for the tax. You tell me your supplies are zero rated not in an exempt category.
bigduckontax and other Tax Specialists are ready to help you
Expert:  bigduckontax replied 3 years ago.
Thank you for your support.

Related Tax Questions