P.O from client inc vat

Accounting
1

Hiya

I company I do some work for sends me purchase orders for work.

Say the amount is £100 plus £20 vat so total is £120

I am a sole trader and not vat registered - do I invoice them £120 or £100?

(side note - the £100 amount is what they were paying another company + vat and they would rather use me than them. They are not bothered that the price is the same but im confused about the vat thing)

What differences will any of this make to me and the other company?

Newbie needing some help…

Cheers

2

If you aren’t VAT registered, you can’t charge it, so £100.

It won’t make any difference to you, or the other company really. The only difference for them, is that there’s nothing for them to claim as they aren’t paying you VAT.

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3

In my head I should charge them 120 as thats what they are expecting to pay inclusive of vat.

Just that on my invoice I should not break it down to show vat (as im not registered) and put £120.

Seems Im unknowingly doing the company a favour.

4

It doesn’t really matter if you charge them £100 or £120, as long as you do not include VAT on your invoice, which you shouldn’t be able to do in Quickfile if you aren’t VAT registered anyway.

As @Parker1090 says, the only difference is that your client can’t claim the £20 VAT back so from their point of view you are £20 dearer if you charge £120.

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