It’s not an uncommon scenario – an unexpected order takes you over the VAT threshold this month. You send in your VAT registration documentation, but what do you do in the meantime regarding a VAT number for your invoices?
HMRC can take around 2 weeks from the date of application to provide a VAT registration number (longer in around 30% of cases) but you cannot charge VAT until you receive it. This is not a problem is you are registering voluntarily, but in this case, if you have exceeded the threshold of £79,000 then registration is compulsory, and VAT must be charged.
To bill the customer after the date of registration but before the VAT number arrives, your best option is to issue a bill for the goods, adding an amount to the bill which is equal to the VAT amount, but crucially, is not listed as VAT. The extra line on your invoice should read “This charge is in lieu of VAT pending registration. You cannot reclaim it on your VAT return until we send you a VAT invoice”. When you have your VAT registration number send a revised invoice showing the extra amount as VAT.
Got more burning VAT queries? Then contact us…and in the meantime, here is the latest VAT update from HMRC.