7 Jan 2008

Both in the tax press and on HMRC's website, there has been much comment on delay's in registering for VAT. As recently as 17 th July 2007, HMRC included an article on the subject on its website.

They appear to be working towards reducing these delays, however, below are some practical points for guidance.

Our advice for businesses and what to do while waiting for your registration to come through is as follows:

• A business not registered for VAT is unable to issue VAT invoices, but will be required to account for VAT from the date that it is liable to be registered.   Care must therefore be taken to ensure that VAT is properly dealt with and recorded in your business's books and records.

• Proforma invoices may be issued on the basis that proper VAT invoices will be issued (showing the new VAT number etc), once the business is registered. It may be appropriate to state on the proforma invoice that a VAT registration number has been applied for.

• Very importantly, there should be no separate itemisation of VAT on the invoice (since the business is not yet registered and charging VAT when not registered is illegal).   One solution is to include within the invoice amount, sufficient to cover the VAT liability once registration is complete.   A separate invoice may then be issued.   A customer may however only be prepared to pay VAT over on the issue of a valid VAT invoice.   This may require the issuing of a separate VAT invoice later.

• Date of registration, as included within your VAT application will trigger the requirement to charge VAT, provided registration is granted from this date.   If someone else has completed your registration, be aware of any date that has been used and be prepared to take account of this.