Preparing VAT Returns - How can an Accountant help?

If you are just starting your own business, you should consider whether you need to register for VAT right away. This may appear daunting to a new business owner, but having this in place from the start may benefit you later on if you are required to register for VAT.Get in touch with our Accountants in Brentford accountants in Brentford if you require assistance with issues that go beyond numbers. We understand that managing the financial affairs of your company can be a difficult task. And it requires a significant amount of time, money, and effort to complete everything right.When a limited company's turnover reaches £81,000, it must register for VAT with HMRC and submit a VAT return every quarter. Value-added tax (VAT) is a tax levied by HMRC on sales of both goods and services that are not exempt from VAT. There are a number of procedures and regulations that must be followed, and we recommend that you use an accountant to ensure that you complete this VAT return correctly.

You could end up with late VAT registration, errors, late VAT returns, and late VAT payments if you don't work with a qualified, experienced accountant. All of these can result in penalties and possibly interest.

It is not impossible to do all of this on your own; HMRC offers sample company accounts and templates on its website, hmrc.gov.uk. However, in order to complete this process successfully, you must first understand the VAT process. This can be both time-consuming and perplexing. An accountant will not only ensure that you have done everything correctly, but they will also ensure that you have claimed all of the expenses and depreciation that you are entitled to, and that you file and pay on time.

Choosing the Best VAT Scheme for Your CompanyThere are several schemes to choose from if you are considering registering for VAT. As a business, you have the option of using Standard VAT Accounting, Flat Rate VAT, or Cash Accounting. Contact one of our VAT return accountants for more information or assistance with your tax return.

VAT Accounting ProceduresBusinesses must add up the VAT they have charged their clients and deduct the VAT they have paid on goods and services purchased under the standard VAT scheme. One of the primary benefits of becoming VAT registered for most businesses is the ability to reclaim the cost of VAT paid on any purchases of goods or services made through the business.

Every quarter, you must file a VAT return, which must include the following information:

Tax on output –If you are VAT-registered, output tax is the VAT calculated and charged on the sale of goods and services from your business. When goods or services are withdrawn for personal use from a registered business, output VAT must be calculated. Even if they have been invoiced but you have yet to receive payment, you must include the VAT on your quarterly return.

Tax on inputs –Input tax is the amount of VAT that you have been charged. The amount added to the goods or services you purchased from your suppliers during the quarter. The amount of input VAT added varies depending on whether the goods or services are subject to standard, reduced, or zero VAT rates. You must include anything billed during that period, even if you haven't yet paid for it, just like with output tax.

The VAT Flat Rate SchemeIf you have registered your company for the Flat Rate Scheme, you will not be able to reclaim VAT paid on goods and services (your input tax). The Flat Rate Scheme eliminates the need to file detailed VAT returns outlining all of your input tax. As a result of the additional revenue and simplified VAT returns, many sole traders and freelancers chose the Flat Rate Scheme to deal with VAT.

In simple terms, you would charge VAT at the full rate of 20% on your goods and services, but only pay HMRC a reduced rate, usually between 13.5 and 14.5 percent depending on the industry you work in. Over the course of a year, this difference can provide a significant boost to your income.

VAT Scheme Using Cash AccountingThe Cash Accounting Scheme is frequently used by businesses that would benefit from only paying back VAT to HMRC once their clients or customers have paid them. The scheme is only available to businesses with a yearly turnover of less than £1.35 million.

You will need to fill out a quarterly VAT return detailing your input and output tax, just like you would with standard VAT accounting (see above). The main distinction is that if you issued an invoice in March but it wasn't paid until June, you would pay the VAT back to HMRC in the June quarter rather than the March quarter.

On behalf of our clients, our tax return assessment specialists can handle all HM Revenue & Customs routine self-assessment income tax enquiries, letters, and inspections. As a result, you can rest assured that the stress and strain of Inland Revenue tax returns will be lifted from your shoulders, as we will handle every step. If you'd like to learn more about how we can help you with your VAT returns, please get in touch with us right away.

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