VAT (Value Added Tax) is levied on goods and services and is payable to HMRC.
Any business that exceeds the turnover threshold for VAT (£85K in 2020), has to register for VAT and must charge VAT on anything it sells. A VAT return has to be submitted quarterly and sent to HMRC with VAT that is payable.
VAT in UK is typically charged at 20% on goods and services sole, ho.wever certain goods and services (e.g. Children’s car seats, radiators etc) can have completely different VAT rates.
Businesses (that supply vatable goods or services) can also choose to voluntarily register for VAT. There are various benefits of being registered for VAT, as they can claim VAT suffered on purchases or some businesses can be in a VAT refund position.
We provide a full fledge service to help you register for the right VAT scheme with all the required documentation. Your dedicated account manager will discuss with you and assess which VAT scheme is best suited for your business. They will then get you registered for VAT and guide you all the way to raising your VAT invoices. The government has come up with various VAT schemes in order to match the conditions of different types of businesses.
VAT is something that no business should take lightly. However, if you work with us, you won’t have to take it heavily either! If you currently don’t fall under the VAT criteria but expect to soon, then you must start preparing for it. HMRC takes these things very seriously, and you don’t want to mess with them.
Having less knowledge about accounts and VAT can sometimes lead you to make the wrong choice. Even if you do make the right choice, sometimes people fail to take full advantage of the scheme they choose. This is where your accountant comes in handy and saves you a lot of trouble and money.
We don’t like waiting till the deadlines, we make sure things are ready for submission well before time so that nothing can go wrong at the last minute. You will even have time to double-check or have us double-check it for you.
You dedicated accountant who will have a good understanding about your business will review your VAT return and submit to HMRC. We will provide the relevant VAT returns reports and any amount that you need to pay.
We will also advise you on EU/EC sales based on your accounts and their position. Handling your finances gives us the knowledge to advise you on such matters so all your business decisions can work out for you.
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The flat rate VAT 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. 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 be liable to pay the flat rate percentage on your turnover for those sales, even though you are not charging VAT on those sales.
Flat rate schemes are therefore useful for service-orientated industries such as Consultants, contractors etc or businesses with very small number of vatable purchases.
Standard VAT accounting allows you to reclaim VAT that you may have had to pay on your purchases. You will pay or reclaim the net of the VAT that you have charged your customers and the VAT that you have had to pay on your purchases.
Standard method follows the accrual basis of accounting; this means that your VAT calculations will be based on your raised invoice rather than the date the invoice was paid.
This could have a negative cash flow effect on your business since you have to pay VAT over to HMRC for services or goods sold, which you have not yet received the money for. On the contrary, if you have not paid for goods purchased, you can claim the VAT on the invoice received, resulting in a positive impact on your cash flow.
In contrast to Standard VAT Accounting Services London, cash accounting allows you to calculate actual VAT money paid or received than on an invoice basis.
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. Using the cash accounting scheme, you do not pay VAT if your customer never pays you.
Choosing the right VAT scheme can make a huge difference in your business. There are a number of factors that need to be considered, such as products or services being supplied, the nature of the business, and the revenue that can all affect the right choice of VAT scheme.
Moreover, once you have chosen the right VAT scheme, the problem arises in the registration stage. Many people are unaware of how to correctly register for VAT. Therefore, having the advice of an accountant alongside often becomes mandatory.
If you are not already MTD compliant, then worry not, we will make sure you are setup on MTD compliant accounting software and are fully compliant. We specialise in Xero, Quickbooks and FreeAgent (all of which are multi-award winning software’s) and are trusted by thousands of businesses in the UK. We are fully accredited and MTD compliant.
At fusion, we offer qualified and experienced accountants to our clients. We are a team that has worked tirelessly over the years to keep our clients out of any VAT related trouble. You will never find yourself missing any deadline. Our accountants will make sure that everything that you need to file for VAT is on your desk well before time so that you can make the necessary arrangements.