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Hi, I guess no one has come across this yet judging by the lack of response. I have checked with the HMRC and after much waiting this was the reply as I understand it.
HMRC do not give any leeway on partly finished work so you have to speak to the client and explain that he will now have to pay VAT on all of his bill.
Once you have registered for VAT you have to allow for it on your invoices but you are not allowed to actually show VAT written on the invoice until you have your registration number. Confused - I was!
Basically, any invoicing done after you have applied for VAT registration has to have an increase of the VAT amount in the total BUT DO NOT type VAT on the invoice. Once you have received your registration number then you re-issue the invoice with VAT actaully typed on it.
I hope that's clear as it really upset my client whose previous bookkeeper had not looked into the registration process and consequently had not warned him about providing quotes to clients when on the VAT threshold. Beware all you who have start-up clients, please warn them about the perils of issuing quotations with no time limitation or not including a clause to cover the introduction of VAT. The issuing of pro forma invoices for set price work could help or issuing part invoices for long drawn out jobs might be another way to deal with it.
If anybody else has any more advice or ideas on this subject, I would be keen to hear them.
Cheers
Nikki
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