VAT is charged on most goods and services provided by VAT-registered businesses in the UK. It is also charged on goods and some services that are imported from other countries.
You will need to register for VAT if the annual turnover of your company exceeds the VAT registration threshold. However, there can be benefits for businesses in registering if your turnover is below this level, depending on the amount of VAT expenditure in your business.
To register, you must submit a VAT1 form to HMRC confirming the business’ details. The VAT registration can take up to a few weeks to come through from HMRC.
Once you are registered, you are required to charge VAT on your sales at the appropriate rate, which is known as “output” VAT. The VAT which you incur on your costs is known as “input” VAT
Invoice or Cash Accounting
If your business turnover is less than the cash accounting threshold, then you have the choice of accounting for your VAT either based on when you invoice your customers or based on when your customers pay you. The cash accounting scheme can help you to match your VAT payments to your business’ cash flow.
Depending on the level of input VAT you incur, you may wish to transfer the output VAT element of your sales receipts into a bank reserve account to help save for your quarterly VAT payment.
Each VAT period (usually quarterly) you must account for the output VAT you have charged to your customers and deduct the input VAT incurred on your costs from this. You must then pay the net balance to HMRC and file your VAT return with them each quarter.
You are required to file your VAT return electronically and pay by Direct Debit or bank transfer.
HMRC requires all Sole Traders, Self Employed, Partnerships and all corporate businesses that are registered for VAT to Complete Quarterly VAT submissions.All businesses in England and Wales are required to register for VAT once a turnover threshold of £85000.00 is reached or the business can choose to register volunatriry. We provide detailed book keeping services regarding VAT tax returns. These services include entering of purchase and sales invoices, posting bank payments and receipts, reconciling bank and credit card accounts, maintaining suppliers and customers ledgers, using appropriate nominal codes and tax codes etc. Alternatively, you can do your own books and we can provide review only service.
We work on a fixed fee basis and provide same day response to all your phone and email enquiries. We will also allocate a designated accounts manager who would have better understanding of your and business financial and taxation affairs. Book a free consultation call using the link below.
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