Self-billing arrangements

[Goonie]

New role will be self-billing - a first for me!

How do I account for it? The contract specifically states that in a self-billing arrangement it is pretty much prohibited to produce your own invoices.

So how do I account for the money going through my books?

Sorry for being a numpty.

[Malvolio]

This popped up elsewhere recently, talking about a big agency's arrangements. My £0.02's worth was, in part:

Assuming you have your own company and not an umbrella...

Firstly you can't raise an invoice for another company, it's illegal. what they are giving you is a payment advice note.

Disregarding that, if you're happy to be paid against an advice note then fine. Otherwise, raise your own invoice purely for your own records: it your company, it's up to you to maintain audit trails. It's not like it's a major effort, after all.

...snip...

Finally the legislation is framed around physical supply of components, so much of the accounting detail doesn't actually translate to supply of services.

So the quick answer is it's not a problem but keep your own paper trail independently. You will have to account for VAT anyway, so it's just as easy to raise your own invoice, just don't send it to the agecy.

[Pistachio]

You get an 'invoice' mailed to you by the agency, but you might want to produce an invoice, as Malvolio says, for your own records (especially if you use accounting software).

The whole 'prohibited' part is sending the agency your own invoice. But if you produce it for yourself and keep it 'in house' you won't get in trouble.

[roadkill]

I was never totally at ease with self billing. At least when you create and send your own invoice you know you've done it!

[PhilAtBFCA]

Goonie

1. You do not have to raise an invoice at all, for your audit trail use the self billing notification from the agency, this will have your vat number on it.
2. You have to account for vat using the figures on the self billing notifiction and in accordnace with your vat basis ( FRS or Standard AND Cash or Invoice )

In your accounting system you may be "forced" to raise an invoice to cover the entry of the VAT and the Sales figure.

Phil

[Malvolio]

Originally Posted by PhilAtBFCA

Goonie

1. You do not have to raise an invoice at all, for your audit trail use the self billing notification from the agency, this will have your vat number on it.
2. You have to account for vat using the figures on the self billing notifiction and in accordnace with your vat basis ( FRS or Standard AND Cash or Invoice )

In your accounting system you may be "forced" to raise an invoice to cover the entry of the VAT and the Sales figure.

Phil

Hate to argue with an accountant, but I prefer to look at this as an IBOYA issue.

If the agency is dumb enough to want to pay me directly from the timesheet then fine, but I'm going to go through the motions of raising my own invoices and doing the VAT accounting so when I go back to a contract that doesn't use this stupid system I don't have to change my ways of working. Also, if their remittance doesn't match my invoice value (as has happened a few times, especially with expenses payments and VAT) then I'll want to know why, because mine will be the correct value. MyCo's money, my responsibility.

It's not redundant effort and I'm not interested in the legal justifications. MyCo has set processes for billing and I'm going to use them.

[PhilAtBFCA]

Originally Posted by Malvolio

Hate to argue with an accountant, but I prefer to look at this as an IBOYA issue.

If the agency is dumb enough to want to pay me directly from the timesheet then fine, but I'm going to go through the motions of raising my own invoices and doing the VAT accounting so when I go back to a contract that doesn't use this stupid system I don't have to change my ways of working. Also, if their remittance doesn't match my invoice value (as has happened a few times, especially with expenses payments and VAT) then I'll want to know why, because mine will be the correct value. MyCo's money, my responsibility.

It's not redundant effort and I'm not interested in the legal justifications. MyCo has set processes for billing and I'm going to use them.

Clicked on the thank you instead of the quote button !!!

Anyway - I dont see it as an argument or that you are disagreeing :-)

I agree that it is an "In Business On Your Own Account" - your business, you do what you want ! If you have a process and stick to it then quite right too !

One small point though - Its the remittance advice on a self billing system that is correct for vat - not your invoice . You are not accounting for VAT correctly if there is a difference between your invoice and the self billing system and you account for the vat on your invoice.

Its a technicality though, as always , in practice lets say you were underpaid then you would ask the agency for more money, and if you got it you would have another self billing remittance. So the two self billing remittances add up to the value that you would have put in the invoice.

So your invoice and the self billing one should always match. If they dont from an HMRC perspective the self billing is correct.

No its not redundant effort but you should be interested in legal "justifications" whether you like it or not. If your processes are not compliant then I think you will be interested in that as it could cost you money in the end.

This is not an agency telling you how to do your accounts. Its not anyone trying to remove your right to be in business on your own account.

There are ways to do your accounts correctly and still maintain your own processes and controls, and its this that I would encourage clients to focus on.

Phil

[CliveP]

[QUOTE=PhilAtBFCA;3730 So your invoice and the self billing one should always match. If they dont from an HMRC perspective the self billing is correct. [/QUOTE]

I've had this issue several times, as Malvolio says, more often than not it's when the reim expenses are accounted incorrectly for VAT. Are you sure it's the Self Bill system that HMRC will take as the correct figure? I always thought it was the other way around....

Thanks
Clive

[Beefy198]

Self-billing can be a god send if you're the forgetful type. I know plenty of contractors who can find it difficult to create and send an invoice on a Friday. No idea why though.