VAT - an introduction

VAT represents another government tax. It is an indirect tax in that it is chargeable on
taxable supplies made between businesses. Each VAT registered business will pay the
net of VAT charged to its customers less VAT suffered on purchases over to HMRC.
Equally if tax suffered exceeds tax charged, the business will submit a VAT reclaim.

Another service provided by all businesses on behalf of the government - tax collecting!
More red tape for small businesses!
 

Why do I need to know about VAT

Following current enforced registration guidelines, if your business makes taxable
supplies with a turnover less than £67000 in any 12 period, you don't!
A business making taxable supplies in the UK must register for VAT when its turnover
in the past 12 months has exceeded the registration limit, or it is expected that the
turnover in the next thirty days will be more than the registration limit.

So the key question for any business for VAT registration is whether it makes a taxable
supply (sorry but the answer is almost certainly yes) and if so does it exceed the
registration limits?

For more details, please click here!

A full list of current and previous VAT registration limits is available here!

If you are unsure and need some initial help, why not try the Business Link quiz?

Beware of failing to register for VAT at the appropriate time - it can cost your business!

Flat rate VAT

To reduce the burden of red tape for businesses, HMRC has introduced flat rate VAT
schemes which allow businesses that qualify to pay a fixed % of turnover to HMRC and
not account for VAT suffered on purchases. The % rate is fixed based on the business type.

This is of particular financial benefit if you have a very low level of input tax.

The flat rate scheme only applies to businesses whose annual turnover (sales) is less than
£150,000 excluding VAT. For more details of the rules and regulations, click here!

VAT registered

Once your business is VAT registered, VAT returns need to be submitted each quarter
end as selected in the VAT registration process. This can be completed on line via the
direct government portal or through the usual paper based returns. Payments can
either be included with the return or made via BACS. Specific deadlines have to be
met to submit the return AND the payment.

Details of on line filing of VAT returns (paperless) can be found here.

Deregistration

A business may cancel it's registration when it's turnover has fallen below the VAT
Deregistration limit, or can show it will fall below the limit in the coming 12 months.

A full list of current and historical VAT de-registration limits is available here!

How can we help?

Help completing the VAT registration process.
Help with managing VAT administration using the most appropriate finance / bookkeeping
software.
Help with submission of regular VAT returns.