VAT is a tax chargeable on taxable supplies made in the UK by taxable persons. Credit is given for tax paid to other businesses and the net balance is payable or reclaimable –
A taxable person is any person carrying on a business which is, or is required to be registered for VAT and includes the following:
- An individual
- A partnership
- An unincorporated association, e.g. trust or charity
- A limited company
- A limited liability partnership
Should I be registered for VAT?
You should notify HM Revenue & Customs when:
- Taxable turnover for the past twelve months exceeds £81,000
- There are reasonable grounds for believing that your turnover for the next 30 days will exceed £81,000
- In the first case, notification must be within thirty days of the end of the relevant month. In the latter case, notification must be within thirty days of the date on which grounds first existed.
It is important to monitor turnover because there is a penalty for late registration. This is in addition to the tax payable
Can I register for VAT if my taxable turnover does not exceed the prescribed limits?
It is possible to register voluntarily provided you have a bona fide business.From April 2013, the HM Revenue & Customs systems and processes supporting the VAT registration applications were improved. HM Revenue & Customs advises the time it takes to issue a VAT registration number will, for the majority of submissions received using the online service take three working days.
Cash accounting scheme There is a special scheme applicable to businesses where taxable turnover is expected to be not more than £1,350,000 in the next 12 months. This allows the trader to account for VAT on the basis of payments received and made rather than on tax invoices issued and received. It may be advantageous to use cash accounting from the date of registration, although some businesses will not benefit from this scheme.
Special schemes of accounting for VAT are available to retailers. We can advise on the best choice.
How often will I have to complete a VAT return?
Every quarter, a return is issued and must be submitted with any payment due to HM Revenue & Customs no later than thirty days from the end of the quarter. Make returns and payments on time because extensive legislation exists to levy penalties on defaulters. Businesses with regular repayments may make monthly returns. Those using the Annual Accounting Scheme need make only one return per year, which has to be submitted two months after the end of the scheme year.
We would be pleased to advise you what records you need to keep to complete the VAT return.