Back dating vat

Businesses only have limited rights to recover input tax retrospectively, so consideration should be given to the date of registration as you can normally only go back four years for recovering the VAT on goods still on hand at the date of registration and six months for services.

Provided that there was an entitlement to be registered a business can ask for a retrospective voluntary registration at the time of its application for registration.

In order to register, the person must be able to satisfy SARS that one or more of the following circumstances applies as at date of application for registration: Top Tip: VAT liability date backdating requests submitted at the SARS branch will only be considered for new and existing registration if the vendor can provide sufficient supporting documents proving the backdated liability.

Kindly note that all other associated registration related supporting documents are still applicable.

The First Tier Tribunal (FTT) found that the misunderstanding of the company over whether the builders’ costs were for goods or services was genuine.

HMRC should have considered this but did not, and so their decision not to allow the backdating was unreasonable.

This can be backdated up to a maximum of four years prior to the date the application is received.

In effect, this means the business can then claim back VAT incurred up to eight years ago on goods still on hand on its first VAT return: by backdating the registration four years and then being able to go back another four years prior to the registration date.

Once the direct debit is cancelled, you will receive a short annual return to complete.An alternative is to issue VAT only invoices in an attempt to recover the VAT which should have been charged i.e. This is appropriate where the customers can recover VAT and there is a reasonable prospect that at least some of the invoices will be paid.It is recommended that business checks with its customers prior to issuing VAT only invoices.Clearly where an earlier date is requested then output tax should be accounted for on any supplies made.The payments received would be treated as VAT inclusive and the VAT fraction of 1/6 should be applied to extract the VAT out of the amount.

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However, if payment is not received, bad debt relief can be claimed after 6 months.

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