Vat invoice and deposits

[snipe]

If I buy something for £30000 and pay in 3 instalments. The first payment of £10000 plus all the vat. When I pay the second and third instalments if the vat rate had increased would I have to pay the extra vat. As I see it under current rules once the first instalment is paid that fixes the Tax point and no further vat can be added.

for the second and third instalment does the supplier have to send an invoice or would a statement be enough. The supplier is telling me if they sent an invoice for the second and third invoice this would trigger a new Tax point.

 

[topground]

What do you know about the Labour Party emergency budget just after July 5th? We should be told!

 

[snipe]

Nothing that no one else doesn’t. Just trying to not pay vat on school fees, but the school and my self have a different idea On whether paying a deposit has the same vat implications as paying in full in advance

 

[neilo]

The

Nothing that no one else doesn’t. Just trying to not pay vat on school fees, but the school and my self have a different idea On whether paying a deposit has the same vat implications as paying in full in advance

I suspect the school is just looking to get the fees paid in full, in advance (which always used to attract a discount).

I’d be inclined to go with their idea tbh, paying from a statement, rather than requiring an invoice each time. Just make sure the payments, and due dates, are detailed in advance maybe?

 

[Goweresque]

Haven't they already said the VAT on school fees won't kick in until September 2025? So if you are paying next years fees (ie for 2024/25 academic year) in advance now then the school is just getting your money to sit on deposit for free, and you're not avoiding any VAT at all?

Labour’s VAT on private school fees would not come in until 2025, Rachel Reeves says

Rachel Reeves says it would not be ‘the right thing to do’ to impose retrospective tax on private schools

www.independent.co.uk

 

[snipe]

I was hoping to just pay a deposit for the next 7 years.

 

[Goweresque]

I was hoping to just pay a deposit for the next 7 years.

I think they'll be wise to that. If the school were to invoice you for 7 years fees, and ask for a 10% deposit(say) then I suspect the legislation will declare that the proportion of the 7 years that falls after the change in the law will become vatable, or something to that effect. They aren't going to let people get around it that easily. If you paid the 7 years fees up front in cash now then maybe you'd escape it, but even then I'm sure they could write a law that caught those cases.

 

[snipe]

This is what Rachel reeves said.
We’re not going to have a retrospective tax,” she told the Times CEO Summit. “I don’t think that would be the right thing to do. So these changes would be in our first budget, but they would come in after that, not retrospectively.”

 

[Goweresque]

This is what Rachel reeves said.
We’re not going to have a retrospective tax,” she told the Times CEO Summit. “I don’t think that would be the right thing to do. So these changes would be in our first budget, but they would come in after that, not retrospectively.”

Yes, that means the VAT will come in on (say) 1st Sept 2025, and won't be backdated to 1st Sept this year. But it doesn't mean they won't take anti-avoidance measures to catch people trying to play the system. After all imposing VAT on services received AFTER the date the tax is imposed is not retrospective is it? Lets not beat about the bush, what you're proposing has no purpose other than to avoid the VAT increase. No-one gets billed for school fees for years in advance. Its just not a done thing. If there was a history in private education of such behaviour then it would be arguable, but they isn't so it isn't.

 

[livestock 1]

The vat is chargeable as per invoice date so effectively it would appear as a late paid invoice with no vat
As said above it depends wether they are willing to follow up such avoidance measures and act on them. You might get away with it it depends how many other people are doing the same and it they are looking for it

 

[d williams]

If I buy something for £30000 and pay in 3 instalments. The first payment of £10000 plus all the vat. When I pay the second and third instalments if the vat rate had increased would I have to pay the extra vat. As I see it under current rules once the first instalment is paid that fixes the Tax point and no further vat can be added.

for the second and third instalment does the supplier have to send an invoice or would a statement be enough. The supplier is telling me if they sent an invoice for the second and third invoice this would trigger a new Tax point.

You’ve paid the vat on the first instalment so the rest is just a agreement between you and your supplier

 

[snipe]

Worth giving it a go, nothing to loose

 

[icanshootwell]

Haven't they already said the VAT on school fees won't kick in until September 2025? So if you are paying next years fees (ie for 2024/25 academic year) in advance now then the school is just getting your money to sit on deposit for free, and you're not avoiding any VAT at all?

Labour’s VAT on private school fees would not come in until 2025, Rachel Reeves says

Rachel Reeves says it would not be ‘the right thing to do’ to impose retrospective tax on private schools

www.independent.co.uk

I'm not even sure this will get off the ground, if they slap vat on private school's surly they must put vat on private nurseries as well which they wouldn't want to do.

 

[Grass And Grain]

Yes, that means the VAT will come in on (say) 1st Sept 2025, and won't be backdated to 1st Sept this year. But it doesn't mean they won't take anti-avoidance measures to catch people trying to play the system. After all imposing VAT on services received AFTER the date the tax is imposed is not retrospective is it? Lets not beat about the bush, what you're proposing has no purpose other than to avoid the VAT increase. No-one gets billed for school fees for years in advance. Its just not a done thing. If there was a history in private education of such behaviour then it would be arguable, but they isn't so it isn't.

It is a thing. At our local independent you can rock up on day one and pay for the next 7 years. School get cash upfront and parents insulated themselves from fee rises. I know people who've done it.

 

[Kidds]

This is what Rachel reeves said.
We’re not going to have a retrospective tax,” she told the Times CEO Summit. “I don’t think that would be the right thing to do. So these changes would be in our first budget, but they would come in after that, not retrospectively.”

What they say and what they do are very rarely the same thing.

 

[neilo]

Yes, that means the VAT will come in on (say) 1st Sept 2025, and won't be backdated to 1st Sept this year. But it doesn't mean they won't take anti-avoidance measures to catch people trying to play the system. After all imposing VAT on services received AFTER the date the tax is imposed is not retrospective is it? Lets not beat about the bush, what you're proposing has no purpose other than to avoid the VAT increase. No-one gets billed for school fees for years in advance. Its just not a done thing. If there was a history in private education of such behaviour then it would be arguable, but they isn't so it isn't.

Many schools have let you pay in advance, usually offering a discount if you do.
It makes good business sense as you are effectively bankrolling them as well as tieing your child to remain at that school right through.

I would have thought getting your money back in the case of the school going bankrupt, or you moving your child, could get quite tricky though.

 

[Punch]

The vat is chargeable as per invoice date so effectively it would appear as a late paid invoice with no vat
As said above it depends wether they are willing to follow up such avoidance measures and act on them. You might get away with it it depends how many other people are doing the same and it they are looking for it

Not sure it would be classed as avoidance or as evasion. No doubt there will be a revenue court case. How deep are your pockets? How much hassle and aggro can you stand when the state comes after you?

 

[livestock 1]

Not sure it would be classed as avoidance or as evasion. No doubt there will be a revenue court case. How deep are your pockets? How much hassle and aggro can you stand when the state comes after you?

Worst case you would only have to pay the vat so nothing to loose

 

[Goweresque]

Many schools have let you pay in advance, usually offering a discount if you do.
It makes good business sense as you are effectively bankrolling them as well as tieing your child to remain at that school right through.

I would have thought getting your money back in the case of the school going bankrupt, or you moving your child, could get quite tricky though.

But we're not talking about paying in full up front (which I suspect would escape the VAT, but its politics nothing is guaranteed) , we're talking about getting an invoice, paying a deposit, then paying installments for the next 7 years. Those are two very different things. In the case of the former at least you have taken on the risk of the school going bust, as you say, and then you'd be a creditor hoping to get some of your money back, in the latter case there is no risk at all. Its purely a paper exercise to avoid the new tax, and I'd be pretty sure they will put measures in place to catch such attempts.

 

[icanshootwell]

But we're not talking about paying in full up front (which I suspect would escape the VAT, but its politics nothing is guaranteed) , we're talking about getting an invoice, paying a deposit, then paying installments for the next 7 years. Those are two very different things. In the case of the former at least you have taken on the risk of the school going bust, as you say, and then you'd be a creditor hoping to get some of your money back, in the latter case there is no risk at all. Its purely a paper exercise to avoid the new tax, and I'd be pretty sure they will put measures in place to catch such attempts.

I've been thinking about avoiding the Vat, school's could charge less per term to keep fees the same as they are now, then add on extras, lunch times, mini bus, trips etc, there's always different avenues you can take, not that I'm an expert on vat avoidance I may add.