I have a rather large expense that is going out on capex. I am paying three monthly instalments on it rather than all upfront. I have just the one invoice from the supplier which I have entered in fine and have paid the first instalment.
The question is around the VAT element…
My VAT period ends at the end of this month. As I have only made the first payment, I have only paid 1/3 of the VAT, however, looking at my VAT position, QF is looking to claim the VAT for the full invoice value. Is this right? Is the VAT man not going to look at it and say ‘No chance pal, you’ve only paid out 1/3 of it, you can’t have it all back’?
If you are on accrual vat , invoice date regardless its paid or not, if cash basis then its different story. Just make sure your vat setting on QF is same as per your vat registration
Either way what it gives with one hand it takes away with the other - on accrual you can reclaim all the vat now even though you haven’t paid the supplier, but if the roles were reversed and you had invoiced one of your own customers now for something they weren’t paying for a couple of months you’d have to pay the VAT over to HMRC before you’d collected it from the customer.
Conversely on cash accounting you don’t have to pay the VAT over til your customers have paid you, but that’s balanced by the fact you can’t reclaim purchase VAT until you’ve paid the supplier.
