Our VAT service
Our seasoned team handles your VAT reporting and returns throughout the year, ensuring compliance with HMRC's Making Tax Digital regulations. Benefit from our blend of cutting-edge accounting software, tax expertise, and a dedicated client manager.
VAT Registration: Your dedicated accounting manager takes charge of all your VAT concerns, assessing your tax efficiency and recommending switches as needed. They handle VAT scheme registration and keep you informed of relevant laws and regulations.
While VAT registration isn't mandatory until revenues reach £90k, if you are growing and likely to hit this figure, registering early anticipates this growth, providing peace of mind to run and expand your business seamlessly.
VAT Returns: We're all about proactive planning, ensuring everything is prepared well in advance of your VAT deadlines. Leave the paperwork to us – it's what we excel at!
We'll provide you with comprehensive VAT returns reports and payment details, ensuring you're fully informed every step of the way.
Count on us for expert guidance on EU/EC sales based on your financial position. With our insights, every decision you make will contribute to your business's success.
Why choose us for VAT
Selecting the right VAT plan is crucial for your business's success. By analysing your products, services, and projected earnings, we determine the most suitable scheme to lower your VAT rate. Our team guides you through the registration process, advises on tax-efficient arrangements, and keeps you informed about VAT law changes.
When you subscribe to our service packages, you gain automatic access to top-rated accounting software like Xero. We oversee the filing of your digital VAT return, ensuring compliance with government regulations. As members of the Association of Chartered Certified Accountants, we offer expert advice and support whenever needed, ensuring your business stays compliant.
At Tax Surgeons, our qualified and experienced accountants work diligently to deliver VAT reporting that ensures compliance and highlights any potential risks. We minimise your liabilities and compliance issues by accurately capturing all aspects of VAT transactions and promptly actioning month-end processes.
Looking for a VAT service for your business?
Speak to one of our qualified accountants to see how we can help you.
What is VAT
VAT, or Value Added Tax, is a consumption tax imposed on goods and services purchased by consumers. Businesses meeting certain turnover thresholds (for tax year 23/24 this is £90k) are required to register for VAT and charge it on the products and services they sell. This VAT is then collected by the business and remitted to HMRC when they file their quarterly returns.
In the UK, VAT is typically charged at different rates:
20% on most goods and services
5% on certain items like health-related products, energy, heating, and protective goods and services
0% on specific products and services related to health, building, publishing, and children's clothing
VAT registration number: Some transactions, such as financial and property transactions, are outside the scope of VAT. VAT registration involves obtaining a unique nine-digit number from the government, prefixed with 'GB'. This number is included on VAT registration certificates, which also specify when the business reached the registration threshold and when the first VAT return is due.
Making Tax Digital for VAT
Making Tax Digital (MTD) has changed tax processes for UK businesses, mandating VAT-registered entities to maintain records and submit VAT returns digitally. As accredited providers of Xero accounting software, we ensure full compliance with MTD regulations. Our expertise enables seamless digital filing of VAT returns, backed by comprehensive VAT guidance and support whenever required.
VAT Payment date
To determine your VAT payment date, you can access your VAT online account through the Government Gateway. Once logged in, your account will display:
Due dates for your VAT Returns.
Deadline for clearing payments to HMRC.
Usually, the submission and payment deadlines align, falling one calendar month and seven days after the end of the accounting period. For instance, if your VAT period ends on March 31, you'll need to pay the VAT owed by May 7. Payments made via direct debit are typically processed three days after the VAT return deadline.
FAQ’s for VAT
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Typically, you'll submit a VAT Return to HM Revenue and Customs (HMRC) every quarter (3 months), known as your 'accounting period.' This return documents your total sales and purchases for that period.
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The most common quarterly VAT return dates are:
1) 1st January - 31st March.
2) 1st April - 30th June.
3) 1st July - 30th September.
4) 1st October - 31st December.
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To submit your VAT Return, you'll need a VAT number and an online account with HMRC. You can then use HMRC's free online service or commercial accounting software to submit your return. However, if you've enrolled in 'Making Tax Digital for VAT,' you can't use the online account for submission.
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If your VAT period concludes, for example, on 31st March, you're required to settle your VAT liability by 7th May. But, if your business is set up for direct debit payments, these are typically processed three days after the VAT return deadline.
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To switch from quarterly to monthly VAT returns, you have two options. You can either log in to your VAT online services account and update your registration details, or you can fill out form VAT484 and mail it to HMRC.
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Failure to file a VAT return or make a payment to HMRC on time results in entering a 12-month probation period, termed a 'surcharge period'. Any subsequent late returns or payments during this period incur penalties, resetting the surcharge period for another 12 months.
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You can typically reclaim VAT on goods purchased up to 4 years before VAT registration and services bought up to 6 months before registration, provided the following conditions are met: The goods were purchased by the entity now registered for VAT.
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When VAT registered, your income and expenses are typically displayed 'net' of VAT, meaning any VAT charged or incurred is not included in the profit and loss account. Moreover, the profit and loss account only reflects 'revenue' transactions directly related to the commercial activity of your small business.
VAT Schemes
VAT schemes aim to streamline how certain VAT-registered businesses calculate and report VAT to HMRC, without altering the actual VAT amounts charged on products and services. Participation in these schemes is optional.
VAT Flat rate scheme
The VAT Flat Rate Scheme was designed to simplify VAT payments for businesses, reducing paperwork and administrative burdens. Under this scheme, businesses pay a fixed rate of VAT to HMRC based on their turnover, keeping the difference between what they charge customers and what they pay to HMRC.
Businesses cannot reclaim VAT on their purchases, except for certain capital assets over £2,000. To qualify for the scheme, businesses must have a VAT turnover of £150,000 or less (excluding VAT) and apply to HMRC.
It's advisable to consult with an accountant or tax adviser to determine if the Flat Rate Scheme is suitable for your business. The amount of VAT paid under this scheme varies depending on the industry and type of business.
Cash VAT accounting
Under the Cash Accounting Scheme, you report and pay VAT to HM Revenue and Customs (HMRC) based on the actual payments you receive from your customers and make to your suppliers. This means you pay VAT on your sales when your customers pay you and reclaim VAT on your purchases when you have paid your suppliers. You must report these figures and pay any VAT owed to HMRC, regardless of whether the invoices have been paid.
To be eligible for the scheme, your VAT taxable turnover must be £1.35 million or less.
Standard VAT accounting
Under standard VAT accounting, financial transactions are recorded when they occur, regardless of when the payment is made. This means that VAT is owed to HMRC for goods or services sold, even if payment has not been received yet, which can negatively impact cash flow.
However, businesses can claim VAT on invoices for goods purchased, even if payment hasn't been made yet, which can have a positive effect on cash flow by reducing tax liabilities.
Other VAT schemes
Annual Accounting Scheme: Allows businesses to make advance VAT payments based on estimated annual turnover, simplifying VAT administration.
Margin Scheme: Applies to businesses selling second-hand goods, art, antiques, or collectibles, allowing VAT to be calculated on the profit margin rather than the full selling price.
Retail Schemes: Tailored for businesses with multiple VAT-inclusive sales, such as retailers, to simplify the calculation of VAT due.
Tour Operators' Margin Scheme (TOMS): Designed for businesses in the travel industry, allowing VAT to be calculated on the profit margin for certain travel services.
Capital Goods Scheme: Deals with the VAT treatment of assets used by a business over time, such as buildings or land.
VAT Groups: Allows two or more companies under common control to register as a single VAT entity, simplifying administration and cash flow.
Postponed VAT Accounting for Imports: Enables UK VAT-registered businesses to account for import VAT on their VAT return rather than paying it upfront at the point of importation.
These schemes offer different methods of VAT calculation and reporting, catering to various business needs and circumstances.
Tax Surgeons Services
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