ICAEW.com works better with JavaScript enabled.
Exclusive content
Access to our exclusive resources is for specific groups of students, users, members and subscribers.
Q: My client is a decorator and recently VAT registered. They are using the Cash Accounting Scheme and have just received full payment for a job that was both invoiced for, and completed, pre-registration. Do they have to account for VAT on this?

A: Only income with a time of supply (tax point) dated while VAT registered is subject to VAT. Under the tax point rules the basic tax point for a supply of services is when the service is performed or completed and the only thing that may still be required is the issuing on an invoice (para 14.2.1 of VAT Notice 700). The basic tax point is therefore pre-registration as the services were completed before VAT registration. A basic tax point is however overridden by an actual tax point (para 14.2.2 of VAT Notice 700). An actual tax point is created if you either receive payment before the basic tax point or issue a “VAT invoice” before, or up to 14 days after, the basic tax point (to the extent of the amount received or invoiced). Since the client was not paid anything in advance and the invoice issued was not a VAT invoice (a VAT invoice cannot be issued by a non-registered trader) the time of supply has not moved from the basic tax point. As a result, no VAT is due on this payment since the service completion and tax point is pre-registration.

Disclaimer

These publications from Markel Tax were correct at the time of going to press and should be considered as principles-based guidance only. To check current validity, call the Markel Tax helpline. ICAEW (as distributor) disclaims all liability for any errors or omissions.

About Markel Tax

Markel Tax offers expert advice on UK tax and VAT via its helpline and provides monthly FAQs with questions and answers on common tax issues for businesses and practitioners.

Open AddCPD icon

Add Verified CPD Activity

Introducing AddCPD, a new way to record your CPD activities!

Log in to start using the AddCPD tool. Available only to ICAEW members.

Add this page to your CPD activity

Step 1 of 3
Download recorded
Download not recorded

Please download the related document if you wish to add this activity to your record

What time are you claiming for this activity?
Mandatory fields

Add this page to your CPD activity

Step 2 of 3
Mandatory field

Add activity to my record

Step 3 of 3
Mandatory field

Activity added

An error has occurred
Please try again

If the problem persists please contact our helpline on +44 (0)1908 248 250