Who needs to register for VAT?
The current VAT registration threshold in the UK for a business is £85,000. If your business has an annual turnover of over this level you are required by law to register for VAT. This rule applies if you are a sole trader or limited company. It is also worth noting that this level is subject to change and has been rising in recent years.
Should I elect to register for VAT?
If your business has a turnover below the VAT registration threshold you can elect to register for VAT if you wish. The advantage of electing is that you can reclaim VAT on purchases. The downside is the additional administration required and there will be an additional cost to your customers if they are not VAT registered. To alleviate the administrative burden you elect for flat rate VAT. Flat rate VAT can be suitable for contractors.
After VAT Registration
Once you register for VAT you will receive a VAT number. You need to include his number on your invoices and being to charge VAT to customers in line with your VAT Rate. You will need to record your VAT on sales and VAT on purchases and include these details in your VAT Return. For start-ups and small businesses, your bookkeeper should record your VAT.
When are VAT Returns Due?
VAT Returns need to be submitted to HMRC typically every three months. You will be able to see when returns are due in HMRC online account but typically returns are due 1 month and 7 days after the end of the accounting period. Your VAT also becomes payable on this day.
What is my VAT Rate?
The standard rate for businesses in the UK is 20% however some businesses will have reduced rates and others will have a zero rate. Energy, for example, is charged at 5% VAT and most food is zero-rated. For more information see the HMRC guide on VAT rates.
How we can help
Most businesses will have a VAT process built into their everyday processing of sales and purchase invoices. VAT Returns will then be made with data taken directly from the accounts package and returned to the Revenue Commissioners or HMRC. Once the system is set up correctly and your bookkeeper has sufficient training then your VAT process should be simple. At MJH Accountancy we work with clients to get simple and easy to operate VAT process set up.
However, Value Added Tax is not always simple and there are lots of situations where advice about registering for VAT, applicable VAT rates and HMRC / revenue VAT schemes is required. That is where our team or VAT experts will be on hand to help.
VAT Services we provide
We advise a range of clients from small self-employed businesses, limited company contractors and small and medium-sized business about VAT structuring. We help clients with VAT issues across all industries, however, we have particular VAT expertise in construction, agriculture, and retail. Here are some of the key tasks we perform for clients:
- Advice about registering for VAT – do you need to register? Should you register?
- VAT registration – this typically takes one month however HMRC can sometimes do it quicker
- Submission of VAT returns – this is mainly an Ireland only service now. VAT returns happen directly from your accounting software in the UK so we can do this for you as part of our bookkeeping service.
- Advise on VAT rates and frequency of returns required
- Advise on what expense types a business is allowed to claim as VAT inputs – VAT on entertainment, travel, and subsistence is one we got lots of queries on
- VAT implications of importing and exporting
- Assistance with Revenue and HMRC VAT audits – We have lots of experience of dealing with queries from Revenue in VAT audits
- Advise on HMRC VAT schemes – HMRC encourages compliance and to do this it has schemes for smaller businesses to relieve the administrative burden. Examples of schemes which we can advise on include annual accounting, cash accounting, and flat rate VAT.
- Farmers VAT claims – in Ireland farmers can reclaim VAT on certain building works
These are some of the ways that we help our clients when it comes to VAT. If you would like to learn more about what your business needs to be doing or setting up a VAT process that is easy to operate then get in touch with our office today.