What is VAT?
Value Added Tax (VAT) is an indirect tax charged on most goods and services provided by VAT registered businesses in the UK.
There are different rates of VAT depending on the goods or services that the business is providing: Standard (20%), Reduced (5%) and Zero. There are also goods that are exempt and outside the scope of VAT.
VAT registered businesses must add VAT to their sales prices: For business customers VAT is added to the price, for non-business customers VAT is included in the stated price. VAT registered businesses can reclaim the VAT that they have and this forms their input VAT.
Taxable Supply
The Taxable Supply constitutes all goods (or services) that you supply that are not exempt from the scope of VAT. This also includes Zero-Rated supplies. A list of exempt supplies is available from us.
VAT Registration
Once it is established that your business is making Taxable Supply you can register either compulsorily or voluntarily. Your business must register compulsorily if your turnover has exceeded the VAT threshold (£77,000). Alternately, you can register voluntarily even if it is not a compulsory requirement.
VAT
VAT registered businesses must add VAT onto their sales which is called ‘output tax’ and pay VAT on supplies, which is called ‘input tax’. VAT calculations (and returns) are usually done every three months, where you must pay the difference if your output VAT exceeds your input VAT, or reclaim the excess if the input VAT is less than output VAT. From 01/04/10 it has become compulsory for all new VAT registered businesses to file the VAT returns online. Shahidullah & Co can help you with every step of this process.
VAT Accounting Schemes
There are a number of schemes set out by HMRC that can help VAT registered businesses:
| Annual accounting scheme | You Pay fixed installments and file one return, then pay/reclaim any balance. |
| Cash accounting scheme | VAT is paid on a cash basis. VAT is reclaimed on a cash basis also. |
| Flat rate scheme | A Flat rate of VAT is paid on a fixed percentage of your turnover. VAT is not reclaimable on purchases. |
| Retail schemes | For retailers who sell high quantities of inexpensive items |
| Margin scheme | For buying or selling second-hand goods. |
| Tour operator scheme | As tour operators are often involved in countries where VAT is not reclaimable, you can calculate VAT on the value they have added only. |
Other VAT issues
Shahidullah & Co can help you with all aspects of VAT, including the following areas:
- VAT De-registration
- Fuel scale charges
- International VAT
- Acquisitions from the EU
- EC sales lists
- Gifts and parties
- VAT on Land and buildings: options to tax
- VAT on construction
- VAT for builders
- VAT for charities
- Errors and amendments
VAT with Shahidullah & Co
We can help you with all aspects of VAT. We will give you comprehensive advice on your business and on how and when to register. Whether you are a new business or you have already registered we can help you to make your VAT calculations quickly and easily.
At Shahidullah & Co we understand that every business has different needs and ways of working, and we make every effort to fit in with you and your working processes’. We can help with the accounting and bookkeeping of your VAT returns. We can even help with arrangements for paperwork collection at your mutual convenience. If, however, you already maintain your book-keeping, we would be happy to work with your current procedures and go from there.