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, Accountant
Category: Tax
Satisfied Customers: 4948
Type Your Tax Question Here...
bigduckontax is online now

VAT i own a recruitment company and due to ease of setup

This answer was rated:

i own a recruitment company and due to ease of setup i have put out my own temp employees through a umbrella company. Every week the umbrella company give me a invoice and i have 60 days to pay that invoice.
My questions refers to VAT. Of course each invoice i get charged VAT so i am due a refund. I have submitted the return on the correct values and have been given vat record check visit. He is due to come to me tomorrow.
The record check is for the period Aug,Sept and oct. Now as i received invoices in october these are not due to be paid by me for another few weeks yet but i have included them on my return as the invoice date.
I am not on cash accounting
Will this be a problem and will i not get my VAT refund because i am claiming for invoices that have not been paid yet but are not due to be paid, but do fall into the vat period. Hope this makes sense
Kind Regards
Hello Steve, I'm Keith and happy to help you with your question. Don't worry, you are definitely in the Dad's Army 'Don't Panic.' situation.
Trading simply could not operate were old, mislaid or forgotten invoices not being capable of passing through the accounts after the quarterly date periods. However, you should be careful in processing invoices for future payments not to reclaim before the quarter relevant to the supply. In reality, of course, it is swings and roundabouts because if its is not in current period and claimed then the claim is merely postponed the next period the net sum due will be reduced. The only significant matter for HM Government is regarding their cash flow in and out, but for most traders it is small beer in the great scheme of things. Frankly, for most normal organisations, such quibbling is a mere exercise in financial futility.
What you must ensure, however, is that all input taxes reclaimed are supported by an appropriate, valid voucher. I vividly recall a VAT visit when an Inspector demanded to see the invoice including the tax of 13p, yes 13 pence, of input tax reclaimed! On the other hand a company for whom I worked had an inspection. After five minutes of seeing the vouchers kept and the accounting records maintained the Inspector remarked 'That he was wasting his time here,' marked up the firm not needing a visit for the next five years and departed for Mr Patel's corner shop down the road with a gleam in his eye! That was thirty years ago and there has been no visit since.
I do hope I have helped set your mind at rest on this matter.
Customer: replied 3 years ago.

Yes kind of

I have invoices for everything i have claimed for that is not a issue.

My only issue is of course i am guessing he is going to go through my bank statements and will see of course that i have not paid some invoices that are on the return. This is only because they are not due.

Due you expect him to remove them from my return and ask to be put in when they are paid or accept that it is a payment term as per other invoices on the return?

He might were you on cash accounting, which you are not.
As i said that sort of juggling is merely an exercise in financial futility.
I had one wonderful VAT inspection where I warned the Inspector that the company acted in effect as a banker for subsidiary companies. He ignored my information and started adding up all the bank receipts. I asked him what he thought he was doing and he said then he would know how much output tax should be paid. I told him that he simply hadn't listened to what I had told him, but he wasn't interested. Post visit the company received an additional bill for over 2000 quid of unpaid VAT. This was returned to the VAT office under cover of a very snotty letter reiterating the position. The demand was hurriedly withdrawn!
I hope you won't meet with such an idiot at your inspection.
bigduckontax and other Tax Specialists are ready to help you
Thank you for your support.