VAT

VAT


If your business turnover exceeds the VAT registration limit (currently £82,000) at any point in a calendar year, then you should register for VAT.


VAT Return - The Basics

The VAT return also includes details of your total purchases (net VAT) and input tax - the VAT you have paid and can reclaim. If you make sales that are exempt from VAT, you will not be able to reclaim any of the VAT you have paid on purchases. Other purchases you cannot usually reclaim VAT include most motor purchases. You can't reclaim VAT unless you have a VAT invoice to prove you paid it.

The VAT return summarises your sales and purchases and the VAT relating to them. All the information you need should be in your VAT records.

The VAT return includes your sales total (net VAT) and output tax - the VAT you charged on sales and which needs to be paid to HMRC. This also includes VAT due on any other taxable transactions, such as if you barter goods or take them for personal use.

Any trade with other European Union (EU) countries must also be recorded on the VAT return. UK companies can generally reclaim VAT on imports from the EU, but VAT is charged and accounted for differently.

VAT returns "must" be submitted online. You must register with HMRC VAT online and use either their software or suitable commercial software - unless your accountant files your VAT return for you. Let Goddards take the hassle away from you.

Tax points, VAT periods and VAT returns

UK VAT-registered businesses complete a VAT return for each VAT period. They are typically quarterly, although you can ask HMRC for a non-standard VAT period. For example, a zero-rated business that always reclaims VAT from HMRC may want to improve their cash flow by completing monthly VAT returns. UK businesses can also ask for quarterly VAT periods which fit in with their financial year end. Smaller businesses can simplify their VAT accounting by option for the Annual Accounting Scheme.

Your VAT return summarises all transactions that took place during the VAT quarter. For VAT purposes, the transaction date is determined by the 'tax point'. This is normally, but not always, the date on the VAT invoice. However, if:
  • there is no VAT invoice like with typical retail sales, the tax point is normally the date of supply
  • payment is made in advance, the tax point is either the earlier of the date of payment or the invoice date
  • the VAT invoice is issued more than 14 days after the date of supply, the tax point is the date of supply
There are special tax point rules for situations, e.g. part payments, in some industries and for some VAT accounting schemes. You may want to take advice to ensure you understand what tax point to put on VAT invoices you issue and what to include in your VAT return.

Online VAT returns are due one month and seven days after the end of the VAT period. Payment of any VAT owed is due at the same time, although HMRC will collect Direct Debit payments three days later. Different deadlines apply to the Annual Accounting scheme and for larger businesses which must make payments on account.

    If you:
    • Require any assistance with the registration process for VAT
    • Are unsure whether you need to register for VAT - for some organisations, it may be beneficial
    • Need help with VAT
    • Would like us to complete your VAT return on your behalf, and then advise you of your liability, before filing online to HMRC
    • Would like any further advice

    Then please do not hesitate to contact us on  020 8941 2187 or info@gandco.co.uk.

    This includes Standard and Flat Rate Returns.

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