Charging VAT on invoices before you are VAT registered

Technically you should not charge VAT on invoices before receiving a VAT number. However, once you receive your VAT number, you will have to pay VAT to HMRC for the period starting from your effective VAT registration date (EDR). So, for practice purposes, businesses who are awaiting their VAT number charge VAT on invoices with a note to explain the reason for this. 
There are two options when a sale is made between EDR and receiving a VAT number:
  1. Wait until a VAT number is received before invoicing customers. Obviously not good for cashflow.
  2. Increase prices to allow for the VAT and tell your customers why. So, for example, if you would have charged a customer £100 for a product that is standard rated for VAT, the price is increased by 20% and charge them £120. So, the price charged is VAT inclusive. The VAT cannot be shown as a separate item on the invoice. When a VAT number is received a proper tax invoice can be issued showing the VAT separately (to enable the recipient of the supply to recover the VAT as input tax).

HMRC reference:
“Accounting for VAT while you wait for your VAT number. You cannot include VAT on your invoices until you get your VAT number but you can increase your prices to account for the VAT you’ll need to pay to HMRC”.
Link  here with an example.

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