VAT Tax Return Assistance
From expert accountants based in London
FAQ about VAT tax returns
Value-added tax, or VAT as popularly known, is a general tax levied on almost all goods and services sold. The notion is that consumers pay a tax on the products and services they purchase. This is done by adding an extra amount on top of the fees as an additional expense and collected on behalf of the government.
VAT rates are percentage based, and therefore will increase as the price of the product or the service increases.
When your business reaches a turnover of £85,000, you are now required to register for VAT.
You can register for VAT voluntarily if your turnover is less than £85,000.
There are a few advantages to voluntarily registering for VAT.
- You will be able to claim all the VAT on the purchases you have made.
- Once your business does reach a thresh hold of £85,000 your price won’t look expensive to your customers, as you would be registered from the get-go.
- As soon you reach a turnover of £85,000, you would need to register for VAT. Failure to do so may amount to penalties. As you will already be registered, you will avoid this.
We can help you decide if it would be advantageous for your business to register for VAT voluntarily.
Registering for VAT can be done online via the following link https://www.gov.uk/vat-registration. Once registered, an online portal will be created from which you will submit your VAT reports.
All you would need are details of your turnover, business activity, and bank details.
We can assist you with this as part of your VAT computation and reporting process.
Under the standard rate VAT scheme (Set at 20%), you will typically submit a quarterly VAT return. This will consist of all the VAT that has been paid and received. The difference will mean that you’re either be liable to pay or receive a refund. (You will get a refund if your purchases were more than your sales)
Flat rate scheme, on the other hand, is designed for businesses with very little revenue. In this scheme, you can still charge your clients 20% VAT; however, you can pay a reduced amount when the time comes to pay HMRC.
Although this sounds good, there is a catch. You are not allowed to claim back any VAT. Therefore, you should make an informed decision before registering.
We can help you decide which VAT scheme will be more suitable for your business.
There are various ways to pay. However, we will let you know the best method of payment depending on your circumstances.
VAT due dates to pay and submit are on the 7th day of the second month following the reporting period.
We will send you reminders well in advance, so you don’t miss the deadline.
There are a few disadvantages of becoming <strong>VAT registered</strong>. However, if your revenue is not over £85k you shouldn’t worry about the following points, unless you are willing to voluntarily register for VAT.
- Some customers/clients may not be VAT registered. This means that they may not be able to reclaim their VAT, and therefore any products or services you sell to them may find it expensive.
- HMRC may send you a colossal bill if you have more VAT on your sales than on your purchases.
- VAT registered companies have to adhere to strict regulations, particularly in recording all VAT invoices and filing their VAT returns every three months.
It is compulsory for companies to register for VAT once their revenue reaches the £85k threshold. Therefore, it is irrelevant to state any pros and cons. However, for companies who want to register for VAT voluntarily, these advantages could be pleasing to here.
- You can apply VAT to almost any product or service. (Detailed list of products and services can be found on GOV.UK)
- You can reclaim VAT from most products or services you have purchased.
- Acts beneficial for marketing. As those companies who are VAT registered can seem credible, as outsiders may assume the company is making sales of over £85k.
- Companies who register for VAT on a voluntary basis are able to reclaim their VAT by up to 4 years on equipment that they are currently using. Therefore, it is essential to keep all invoices recorded properly to avoid losing out on claiming VAT once you are certain of voluntarily registering.
We will go through a sample of your bookkeeping records to ensure data is recorded reasonably. After which, our experts will calculate your VAT and send the report over to you. Once you’re happy, we will go ahead and submit this digitally, making sure it complies with the new MTD (making tax digital) regulations.