Here are the facts on taxing questions you must answer
VAT…….URGH!!!! I hear you groan. This is a common reaction of many.Small businesses, large businesses are all caught by the tax.
There aren’t many businesses these days that can remain below the threshold of £82,000. That’s a weekly income of around £1,576. If you are employing one or two people you are probably over the threshold already.
If you are below or approaching you have a responsibility to check you turnover on a rolling basis. You will need to add up the previous 12 months to check you are below the registration limit.
If you hit the limit you have 30 days to register with H M Revenue & Customs. When you register you will have to provide turnover details and business details. You will also be asked if you expect to get refunds of VAT (farmers, etc) or if you have any other schemes you wish to apply for.
VAT standard rate is 20% on all your sales once registered, unless you supply items in the reduced rate category of 5% or zero rated items.
Flat rate scheme is popular for small businesses allowing them to simplify their VAT returns in one easy calculation although this may not be the most tax efficient. Instead of adding all the VAT on your sales and deducting all the VAT on your costs you simple add up all your income and apply the flat rate % for your industry.
Once registered you will normally submit VAT returns every three months, and these are to be completed online. If you are due refunds every month you may be asked to prepare returns monthly.
At the end of your three months, you have 1 month and 7 days to complete and submit and pay your VAT over to HMRC. You can use computer systems to help and they also have a built in function to submit to HMRC directly from the programme.
Payment is preferred by Direct Debit from your bank account.
If you would like some advice on VAT registration or support with your registration or returns please contact us. We have a growing department and are happy to take on new customers. We prepare VAT returns for many customers and process the paperwork and returns to ensure you are kept up-to-date.