VAT (Value Added Tax)
VAT is an indirect tax on supplies of goods and services. Once a business has taxable turnover up to £82,000 (2015/2016) it must register with HMRC to become VAT registered.
In the UK the current rate of standard vat is 20% but taxable supplies could also be a reduced rate of 5% or zero rated.
Once registered for VAT a business must charge VAT on all its supplies and can reclaim VAT on all its purchases with the net amount being owed to HMRC. There are several different VAT accounting schemes a business may wish to consider – please ask us if you require any advice.
The most usual VAT accounting scheme is done on a quarterly basis with payment and submission to HMRC due one month and seven days after the quarter end. Therefore, it is vital that a business maintains control over its sales and purchases in order to submit an accurate return. It is equally important that all receipts of expenditure are kept securely and be available to view by an HMRC inspector if necessary. Records can be kept as hard copies or electronic copies – we can demonstrate to you how efficient these receipts could be logged and kept electronically using a Xero Application.
If you would like support in inputting data or preparing and submitting your VAT returns, please give us a call now for a quote.