VAT

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!

Following current enforced registration guidleines, if your business makes taxable supplies with a turnover less than £77000 in any 12 month 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 does it make a taxable supply (sorry but the answer is almost certainly yes) and if so do I 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 dear!

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!

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.

A business may cancel it's registration when it's turnover has fallen below the VAT Deregistration limit, of £75'000, or can show it will fall below the limit in the coming 12 months.

• By completing the VAT registration process.
• By managing VAT administration using the most appropriate finance / bookkeeping software.
• By submitting regular VAT returns.