VAT period and sales

transaction

You shouild post the sales in the month they were made. Show them as a debtor until the money is received.

Thanks Peter. The problem with doing that is that we don't know the actual payment amount until we get the self-billed invoice. We can guess at the approximate amount, but it won't be what we get paid. I wouldn't want to put in VAT amounts etc. until I was sure of the exact amount.

Does the fact the customer is paying a third party rather than ourselves change anything? I suppose the customer will be unaware this is the case. i.e. the transaction actually takes place between the customer and the third party, who pay us a lump sum for a particular month at a later date.

Cheers John

guess at the

wouldn't want to put

Your VAT liability will be on the selling price, not the payment you receive from the credit card company. So if you know you've sold 100 widgets at 11.75 each, and you pay 5% for the transaction processing, you'll get 11.16 per widget, but your VAT will be 1.75 per widget because the value for VAT was 10, not

If you don't know the amount of VAT you owe to Customs & Excise, you can estimate it. This however should not be a regular occurence and needs the approval of Customs & Excise before you do it. You have to adjust the estimate on the next VAT return to ensure the correct amount of VAT is accounted for at the earliest opporunity.

ourselves

and the third

date.

No, it doesn't change a thing. If you're paid by cheque or in cash, you pay bank charges for depositing the amount, but you don't reduce the value of your sales by that amount when working out the VAT. The credit card charges are just the same.

Your system should be able to tell you how much you've sold, otherwise how are you going to be able to verify the amounts received from the credit card companies? To meet the VAT requirements you will need to know this information, and use it prepare your VAT return. I think the VAT office will get a little shirty with you if you wait for your credit card company to tell you how much you've earned.

Understood.

Ah, the waters are muddied slightly I think. One of our payment methods is by premium rate telephone call. This is where the customer dials up a number for x minutes at y per minute. So the customer will end up paying their phone company y per minute but the phone company (via another company!) will only pay us, say 85% of y. We are told we have generated a certain number of minutes of calls for the month and are paid our outpayment rate for those minutes. So there has never been a definite sale price.

I am going to have to check this with our accountant now, as we have been operating like this for a couple of years. Now our bookkeeper has left so I am starting to get my head around everything, but it's a bit of a minefield!

Thanks, John

dials up a number

paying their

company!)

a certain

outpayment rate

price.

Right! The mud clears a bit. This is a different situation to the one originally painted, and highlights the importance of giving all the facts, or the answer you get may not be the right one for your situation.

It's late on Saturday evening, so excuse me for being brief. You may be dealing with the VAT on these payments correctly. I'd need to research it to give a more positive answer.

has left so I

VAT is a minefield! That's why I can earn a living from giving advice about it ;-)

Phew! I did worry for a bit.. it's so difficult to give all the facts without turning the post into a multiple-page business plan which probably bores everyone halfway through!

In our case I had a think about who collects the VAT and where, and it all kind of made sense - the customer pays their BT bill, plus VAT, and our billing intermediary invoices them for their take, plus VAT, and we invoice them, plus VAT .. as long as HMCE don't lose out I suppose that's all that matters ;-)

Cheers, John