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VAT is complex and the rules surrounding what you can reclaim or charge VAT on can be easily misunderstood. Here at Core Accounting Services Ltd we have had years of experience handling VAT, and the common questions that arise.
Some of the more common questions that are asked include:
Do I need to be VAT registered?
From what date do I need to be registered?
How do I calculate my turnover for VAT?
When do I have to pay VAT on my invoices?
What scheme is best for me?
Can I claim VAT paid on items I bought prior to VAT registering?
I am selling / buying goods from abroad. How does this affect me?
What is part exemption and does this affect me?
What are the BtoB and BtoC rules? And do they effect me?
WHY CHOOSE CORE?
VAT is one of the most complicated taxes your business is required to pay. With a constant stream of changes to the regulations, not everyone gets it right. Some businesses inadvertently pay too much, or too little. With a full range of cost-effective services ranging from general advice to VAT return completions, we’ll ensure your VAT payments are correct and on time, every time.
SIMPLIFY YOUR VAT
We are experts at VAT, we have a core of experience and lets face it
its our job to make your life easier.
We can help with:
VAT Scheme selection
Quarterly VAT returns
VAT Planning and administration
VAT control and reconciliations
Efficient VAT management
VAT disputes with customs & excises
Talk to us today
With careful VAT scheme selection, we will ensure you never over pay your VAT returns.
Contact us for your free VAT assessment today to see how much you could save
VAT: THE BASICS
Flat Rate Scheme
Cash Accounting Scheme
Annual Accounting Scheme
The Flat Rate Scheme is designed to help small businesses reduce the amount of time they spend accounting for VAT.
Using the Flat Rate Scheme you do not have to calculate the VAT on each and every transaction. Instead, you simply pay a flat rate percentage of your turnover as VAT. This gives you the following benefits: easier record-keeping - no need to separate out the gross, VAT and net in your accounts more time for you - less work doing the books so you can get on with running your business fewer rules to follow - no more problems about what VAT you can and cannot reclaim on your purchases peace of mind - less chance of mistakes, so fewer worries certainty - you always know how much of your takings you will need to pay to HMRC. The percentage is less than the standard VAT rate because it takes into account the fact that you are not reclaiming VAT on your purchases.
There is a range of flat rate percentages - the one you use depends on your trade sector. Although the Flat Rate Scheme can reduce your paperwork, one downside is that you cannot reclaim VAT on your purchases. If you buy a lot of goods and services from VAT-registered business, you could end up paying more VAT. Also, if you make a lot of zero-rated or exempt sales, you could end up paying more VAT because you will still pay the flat rate percentage on your turnover for those sales, even though you are not charging VAT on those sales.
Usually VAT is payable when an invoice is issued. In contrast, using the Cash Accounting Scheme, you do not need to pay VAT until your customer has paid you. But you also cannot reclaim VAT on your purchases until you have paid for them.
Cash accounting can be beneficial for your cash flow especially if your customers are slow to pay. It is even more useful if you have bad debts. Under standard accounting for VAT, you have to pay the VAT on the debt even if you never receive the payment from your customer. Using the Cash Accounting Scheme, you do not pay the VAT if your customer never pays you.
The Cash Accounting Scheme may not be for you if you regularly reclaim more VAT than you pay, or if you buy a lot of goods and services on credit.
Using the Annual Accounting Scheme, you pay VAT on account throughout the year in nine monthly or three quarterly installments. These installments are based on the VAT you paid in the previous year. If you have been trading for less than a year, the installments are based on an estimate of your VAT liability.
You only need to complete one VAT return at the end of the year. If you have not paid enough VAT on account you make a balancing payment to HM Revenue & Customs (HMRC). If you have overpaid, you claim a refund from HMRC. Annual accounting can reduce your paperwork because you only need to complete one annual return instead of four quarterly returns. It can also make it easier to manage your cash flow.
However, it does not remove the requirement to keep all required VAT records and accounts. Annual accounting is not suitable for businesses that regularly reclaim VAT as you would only get one repayment at the end of the year. Another disadvantage of annual accounting is that if your turnover decreases, your interim payments may be higher than under the standard VAT accounting.
Working with Core Accounting Services and their regular visits has helped me grow my Business - John, Bognor Business services
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We Help a wide variety of clients with their VAT; call us to see how we can help you
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