My client has a self billing arrangement with their customer. They had to registered for VAT and have this backdated to 6 months.
Therefore the customer had to issue a VAT output only sales invoice to account for the 20% VAT on the previous six months' invoices. However, this was issued and paid just after the first VAT Return period. So their first VAT Return is a repayment situation whereas going forward it be payable.
Do I include the VAT output in the first VAT Return or leave this in the next VAT Return?
What is the technical issues and will HMR&C raise an enquiry?
I can write a letter to them to explain this.