VAT billing when business deregistered mid payment

A

ali

Registered User
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Hi All,

Business estimates cost for job.

Receives part payment while job is underway.

Has to go legal to recoup balance after job is complete.

Subsequently deregisters for VAT due to general trading conditions and threshold.

Legal settlement reached = Balance less approx 10k.

Settlement figure less original partpayment received (6 months after business has deregistered) No VAT returned on this payment obviously.

Other party looking for final invoice for VAT refund purposes.

How to show VAT element? Is it only charged on original part payments?

Hope above is clear.

Thanks for any help.

A.
 
J.Ryan said:
Did you quote VAT inclusive or exclusive
Click to expand...

Original quote showed VAT for whole job as the business didn't realise they would be deregistering due to down turn and turnover. However by the time the payment was received 6 months after deregistering; works had been completed for 10 months.
 
Just because you are deregistered does not mean you have no VAT liability for the debtors at the time you deregister.

Of course you have to return VAT. According to the VAT acts, an invoice must be raised within 30 days of providing the service / goods.

I presume you are on a cash receipts basis, when you deregister you have to keep adjusting the last VAT period to reflect the VAT on the cash receipts of the debtors at the end of that period. Basically, all the VAT on your debtors ledger at the time of deregistering will have to be returned. You must always account and pay VAT on deposits in the period in which the deposit is received.

If you have a bad debt, you raise a credit note referencing bad debt on it and issue it to your customer. It will reduce the VAT payable for you.
 
Paddy199 said:
Just because you are deregistered does not mean you have no VAT liability for the debtors at the time you deregister.

Of course you have to return VAT. According to the VAT acts, an invoice must be raised within 30 days of providing the service / goods.

I presume you are on a cash receipts basis, when you deregister you have to keep adjuecting the last VAT period to reflect the VAT on the cash receipts of the debtors at the end of that period. Basically, all the VAT on your debtors ledger at the time of deregistering will have to be returned. You must always account and pay VAT on deposits in the period in which the deposit is received.

If you have a bad debt, you raise a credit note referencing bad debt on it and issue it to your customer. It will reduce the VAT payable for you.
Click to expand...

Many thanks for such a comprehensive reply.
 
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