VAT… Where to start? VAT can be confusing for any business owner, and especially for those who might be new to running a business. Do you need accrual accounting? Perhaps cash accounting? What about a flat rate scheme? If you need some support with VAT, Pomfrey Accountants are here to help.
AN INTRODUCTION TO VAT
This is what you need to know regarding VAT:
- You need to be VAT registered if your total sales for the previous 12-month period exceed a particular figure. You can find up-to-date information about VAT thresholds on the government’s website.
- You must inform HMRC within 30 days of the end of the month when your turnover exceeded the VAT threshold. Usually, you will be VAT registered as of the first day of the next month.
- If it is likely that your turnover will exceed the threshold in the near future you might be required to register for VAT now. We can advise you further.
Sometimes it can benefit a business to register for VAT before their turnover reaches this amount. If this is the case for you, we can offer you advice on the best course of action to take.
HOW CAN WE HELP YOU WITH VAT?
We are experienced accountants, used to dealing with VAT. We can offer you unrivalled advice regarding your VAT obligations, so if there are any tax breaks or exemptions that are applicable to you, we will know about them and will inform you further. We can take care of your VAT as part of a bookkeeping package, or we can simply help you complete and submit your VAT returns at the end of a financial year.
Q: How does VAT work?
A: Standard VAT requires the following:
- Add up all the VAT you have charged (20% on top of net fees)
- Deduct VAT you have paid to suppliers
- Pay the difference to HMRC
This will usually need to be reported to HMRC quarterly in the form of a VAT return.
Q: Do I need to register for VAT?
A: This depends on whether you are close to reaching the threshold for VAT registration. If your turnover is close to this figure or likely to go over it soon, you may be required to register for VAT. You can find out the current thresholds at GOV.UK
It might be the case that registering for VAT will be beneficial for you, allowing you to claim back VAT, or charging VAT and paying it over at a lower rate. We can advise you further based on your personal circumstances.
Q: Are there any exemptions?
A: You may be exempt if you are a sole trader. However, the advice from HMRC can be a little confusing and the penalties can be serious. You can begin by looking at the information provided by the government, and if you need any further advice, please don’t hesitate to ask.