Directory Image
This website uses cookies to improve user experience. By using our website you consent to all cookies in accordance with our Privacy Policy.

The Number 1 Thing You Must Know About Vat

Author: Archie Bunker
by Archie Bunker
Posted: Mar 02, 2017

When a bu?in??? r?gi?t?r? for VAT it b???m?? responsible for charging VAT at th? correct percentage on?v?r? sales inv?i???nd tr?n?f?r?f g??d??nd??rvi????nd?l?? m?int?ining???ur?t? financial????unting records?f th? VAT?h?rg?d that?r??ubj??t t? VAT in????ti?n?. If th???l?? turn?v?r has br???h?d th? VAT threshold th?t business i? liable f?r th? VAT?n??l?? even if it h?? not?h?rg?d th??u?t?m?r.

Th? VAT?h?rg?d to?u?t?m?r? i???ll?d output t?x?nd th? VAT on?ur?h???? i? called input tax. Wh?n a bu?in??? h?? r?gi?t?r?d f?r VAT in?dditi?n t? m?int?ining r???rd? of sales?nd in?ut t?x it must?l?? k??????ur?t? fin?n?i?l r???rd??f?ur?h?????nd in?ut tax in order t???l?ul?t? th? VAT???m?nt t? be m?d?.

The?m?unt?f VAT t? be??id???h?u?rt?r i? the difference b?tw??n the??l???ut?ut tax and th??ur?h???? in?ut t?x?nd i? paid?u?rt?rl? t? HMRC.

Specific t???? of bu?in??? transactions?r??x?m?t fr?m VAT?u?h?? insurance?nd loans. If th? business?nl??u??li???x?m?t it?m? then th? bu?in??? cannot register for VAT t? r??l?im the in?ut t?x paid on?ur?h????.

Registering v?lunt?ril? f?r VAT wh?n th???l?? turn?v?r i? b?l?w th? VAT thr??h?ld is a fin?n?i?l?l?nning decision that each small business?h?uld??n?id?r. Th?r??r? b?th advantages?nd disadvantages to a v?lunt?r? r?gi?tr?ti?n?nd th? timing?f th? registration m???l?? be a f??tur? t? b? t?k?n into????unt.

Th? advantages in?lud? b?ing able t? r??l?im th? input t?x?n?ur?h???? whi?h is otherwise lost as a fin?n?i?l???t to the bu?in???. H?w?v?r?? a??n???u?n?? of a v?lunt?r? VAT r?gi?tr?ti?n that bu?in??? w?uld?l?? h?v? t? charge v?lu??dd?d t?x?n?ll it???l?? inv?i???.

If the bu?in??? h?? m?inl? VAT r?gi?t?r?d?li?nt? th?n?h?rging value added t?x w?uld probably n?t?ff??t??l?? v?lum??nd has th? advantage of?nh?n??d?r?dibilit? within the bu?in?????mmunit? in whi?h it???r?t??. Charging v?lu??dd?d t?x to n?n r?gi?t?r?d clients?u?h?? m?mb?r??f th? public w?uld in?r???? th??m?unt being?h?rg?d?nd m?k? th? small bu?in??? l??? competitive.

Wh?n a business m?v?? fr?m b?ing n?t registered t? b?ing r?gi?t?r?d?h?ng?? m?? h?v? to b? m?d? t? th? bookkeeping records b?ing m?int?in?d. N?t n?rm?ll? a?r?bl?m if????unting?r b??kk???ing??ftw?r? is b?ing u??d?r?vid?d th? fin?n?i?l???t?m employed??n fulfill the?nh?n??d r??uir?m?nt? being VAT r?gi?t?r?d.

In r?l?ti?n to purchase inv?i??? th? in?ut tax m???nl? b? r??l?im?d?n th??? inv?i??? for whi?h th? bu?in??? h?? a?ur?h??? inv?i??. A v?lid purchase inv?i????nt?in? th? VAT number?f th? supplier wh? issued th? inv?i??. An????unting record mu?t b? k??t?f?ll?ur?h??? inv?i??? showing the output t?x being r??l?im?d.

There are?f??ur????rk? t? NOT b?ing VAT R?gi?t?r?d unl?????u n??d t? b?. Y?u do n?t h?v? t??ubmit a VAT R?turn?v?r? 3 m?nth??nd??u d? n?t h?v? t? r???rd quite?? much d?t?il when keeping your????unt?! Al??, if??ur customers?r? primarily members of the?ubli? (i.e. not bu?in??? wh? w?uld??t?nti?ll? be VAT Registered and?bl? to?l?im th? VAT back), b? n?t?h?rging VAT on??ur goods,??u would possibly b? cheaper th?n most of your competitors?nd th?r?f?r? more likely t? make more??l??! Or alternatively, you could?till?h?rg? th???m??m?unt as??ur??m??tit?r??nd make a bit more?r?fit!

Y?u can r?gi?t?r f?r VAT with HMRC, but be w?rn?d it??n??m?tim?? t?k? a few weeks f?r??ur VAT numb?r t???m? thr?ugh!

On????u h?v? a VAT Numb?r,?n???l? you m?k? th?t i??ligibl? f?r VAT mu?t h?v? VAT?h?rg?d?n it. If??u are running a Limit?d C?m??n?, this m??n? ALL th? company's sales must?h?rg? VAT. If you?r? self?m?l???d, ALL of??ur??l????u m?k???r??n?ll? must h?v? VAT?h?rg?d on. You must?l?? di??l??? your VAT numb?r on??ur w?b?it??nd all??ur invoices - as w?ll?? making it?l??r th?t??ur?ri??? in?lud? VAT?n??ur w?b?it??nd showing the t?t?l VAT?h?rg?d?n your invoices!

Wh?n you are VAT r?gi?t?r?d you will b??blig?d t??ubmit a VAT R?turn every 3 m?nth? on line. Thi? is v?r??im?l? to do n?w - th? most??m?li??t?d bit i???tting it u?! On????u have registered t? fil? th?m online,??u can set a?t?nding?rd?r u??? well so the amount??u?w? will?ut?m?ti??ll? be t?k?n fr?m??ur b?nk account a few d??? later. B? warned th?ugh th?t??u d? not w?nt t? b? l?t? filing VAT Returns! The fir?t?n? they m???v?r l??k, but after that th? m?r? R?turn? you file late, the bigg?r th? fin????u will g?t?nd th? more tr?ubl? you??uld g?t int? with th? VAT man!

E??h m?nth you n??d to provide your?m?l????? with????li??, showing how mu?h th?? have??rn?d?nd what taxes h?v? been d?du?t?d. Y?u th?n h?v? t? pay this?m?unt?v?r to the t?x m?n?n th?ir b?h?lf. At th??nd?f the year??u h?v? t??r?vid???ur?t?ff with?nd?f year summaries and you have t??ubmit diff?r?nt f?rm? t? HMRC.

About the Author

We uncover tax problems and give you the best solution. Get a quote today. Accountants in Luton, serving clients nationwide online.

Rate this Article
Leave a Comment
Author Thumbnail
I Agree:
Comment 
Pictures
Author: Archie Bunker

Archie Bunker

Member since: Nov 23, 2016
Published articles: 13

Related Articles