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Author: JP / / Latest News

Do you have creditors over 6 months old? Are you dealing with VAT correctly?

Are you on Standard VAT accounting (often called Invoice Basis), where you claim back the VAT based on the invoice date rather than the payment date?

If so, do you ever have amounts owing to suppliers for more than 6 months?

If the answer to this is also “yes”, you need to check that you are dealing with the VAT correctly.

If an invoice is unpaid 6 months after the due date (so if payment were due within 30 days, that’s 7 months after the invoice date) then you should adjust the next VAT return to repay to HMRC the VAT that was previously reclaimed.

If the invoice is paid later, then the VAT can be reclaimed again.

This is a very productive area for HMRC officers when conducting VAT visits as many businesses fail to apply this legislation.

Therefore, each VAT quarter you should check your aged creditors and make any relevant adjustments.

On the flip side, if you have anyone who owes you money and the invoice is more than 6 months overdue for payment, you can reclaim the VAT on your next return!

 

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