How To Put Rules Into Excel For An Invoice Template To Allow It To Calculate Vat

Limited company contractors just starting out, or experienced contractors returning to contracting after a intermission in a permanent role, may have to issue VAT only invoices during their first few months of trading, and ensure the pre-VAT invoices they consequence include the correct data.

This is because applying for a VAT registration number from HMRC to both reclaim VAT on their business expenses and charge clients VAT can be a lengthy process, taking up to two months.

Some contractors may take been trading and issued several invoices during that menstruation without a VAT number and with no VAT charged. HMRC will backdate the VAT registration date so that some of these invoices volition be liable for VAT. To repossess this VAT from agencies and clients, contractors must effect a VAT simply invoice.

How to invoice earlier the VAT registration is complete

HMRC prefers businesses issuing invoices prior to the VAT registration coming through to upshot a pro-forma invoice. These include the contractor's fees plus the VAT, and so exist re-issued and paid when the VAT number really arrives.

Yet, undergoing several months without pay is not an pick for well-nigh contractors, particularly those just starting out. Under these circumstances, the contractor tin issue an invoice without VAT to be paid by the client or agency co-ordinate to the terms agreed.

HMRC's rules say that VAT invoices must include sure details:

A unique invoice number and the invoice date
The contractor'due south company name and address
The client or agency's name and address
A clarification of the services provided.

A fully compliant VAT invoice should as well include the contractor limited company's VAT registration number, the corporeality of VAT charged and the rate used. Nevertheless, this is not possible if the contractor has not even so received their VAT number.

Land 'VAT registration pending' to avoid being out of pocket

The solution is for the contractor to consequence invoices that include the data above, plus their fees and state clearly on the invoice that VAT registration is awaiting.

This is essential considering a contractor could upshot an invoice with no VAT and without stating that VAT registration has been applied for and is awaiting. And so a backdated VAT registration could arrive confirming that the invoice is covered within the period that the VAT registration starts, and and so be liable for VAT.

The vast majority of agencies and clients, if in receipt of an original invoice stating 'VAT registration pending', volition pay a VAT simply invoice a few weeks or months later, when the contractor'south VAT registration arrives

The contractor could then try to reclaim the VAT from their agency or client, who could in turn say 'no, in that location was no VAT on your original invoice nor any indication that we would have to pay VAT, so we won't pay it'.

The contractor must however pay the VAT to HMRC, because the invoice falls inside the period from when VAT registration started. So if the client or agency refuses to pay whatever VAT, then the contractor'south company is liable to make up the difference and pay twenty% of the fees invoiced to HMRC, meaning the contractor takes a 20% hit on their fees.

Creating a VAT just invoice

Fortunately the vast majority of agencies and clients, if in receipt of an original invoice stating 'VAT registration awaiting', will pay a VAT only invoice a few weeks or months later, when the contractor'southward VAT registration arrives.

Creating a VAT only invoice is straightforward – come across the example beneath and download a VAT only invoice template. Each invoice must include:

The same invoice number, engagement and address information equally detailed above
The new VAT registration number, which must at present exist added to all invoices
A description of the services to which the VAT applies
The prevailing rate (currently 20% for typical contractor services)
The bodily VAT amount.

Once this VAT has been paid by the client, the contractor tin can process the payment in their first VAT return, which will include all the fees earned since the registration date and the VAT paid by clients, less the VAT incurred by the contractor's company on goods and services.

Sample Invoice

Wicked Solutions 50 Software Drive London E1 3FR Tel: 0208 555 555 Company #:112334 VAT: Registration applied for
Invoice Number:		ABC001 - VAT Just
Date:		01 Jan 2014
Due Date:		01 February 2014

To:	ABC Ltd
VAT Only Invoice:
	Contracting Services - Oct 2013		£10,000
	Contracting Services - Nov 2013		£x,000
	Contracting Services - December 2013		£10,000
	Total		£thirty,000.00
		VAT @ twenty%	£6,000.00
Payment terms:	Payment within 30 days.
Coin transfer to the account below: Wicked Solutions Ltd Sort Code: 20-21-22 Account No: 12345678

Invoice Templates

Invoice Template - Word Invoice Template - Excel