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VAT
Company be liable for VAT when sales reach the VAT threshold set at 1 April 2007 to £ 64,000 per year regardless of whether the company has registered for VAT purposes.
companies that have customers are VAT registered should consider opting for voluntary VAT sales would not affect the VAT and file would allow the company to also recover the VAT input tax on purchases. Businesses with mainly non VAT registered customers may wish to defer VAT until the point is reached where the liability to VAT will be inevitable. Consideration should be given to maintaining sales below the VAT threshold to no result in significant loss of profit. When the VAT threshold of £ 64,000 P. A. crossing Customs & Taxes should be advised. It may be possible to postpone the VAT if sales breached the VAT threshold of abnormal sales period that may not necessarily be repeated in the foreseeable future.
Having reached the point of VAT should be considered to various estimates VAT that are available to either simplify VAT calculation or smooth the VAT tax.
Choose the right VAT scheme for your business
Except VAT system is adopted then the standard input and output VAT system would be applied. This involves charging all customers VAT on sales known as output VAT and pay this amount of Vat office each quarter. VAT registered company can also reduce the VAT liability of input VAT on purchases that suppliers have charged the business. It is important to ensure all sales and purchase invoices are retained and audit trail of individual transactions for VAT tax liability is maintained as Customs & Taxes not see VAT records, the frequency of these visits, often once every three years can increase dramatically if the VAT records are considered inadequate. Accounting Software can provide solutions to take hold and DIY Accounting produce automatic calculation of VAT on basic data entry of sales and purchases of Excel.
VAT Schemes
Vat Flat Rate Scheme
VAT flat rate system can accept companies that have an annual turnover excluding VAT of under £ 150,000 a year
Instead of paying the difference between the VAT on sales and the VAT on purchases of companies that have adopted VAT flat rate system of tax on a percentage of sales in line with the average for the business sector. Vat is not reclaimable on purchases under the flat system. The website Customs & Taxes contains information about the VAT flat rate percentages for each sector.
Customers are charged VAT at the normal VAT, 17.5% if standard rated goods. Actual VAT paid as calculated at the appropriate percentage of the total sales figure including VAT. Adjustment of accounts would then be necessary to correct for differences in VAT paid and payable if the inputs and outputs basis had been used. DIY Accounting software automates this flat rate calculation automatically calculate VAT on sale of fixed fees and charges VAT input to Buy accounts.
Companies in the first year of VAT will also receive a 1% reduction in VAT flat rate for the sector of their business that can save tax.
Annual Vat Accounting Scheme
not suitable if you receive repayments of VAT annual accounting system is based on the annual program of the VAT bill which is then paid in monthly or quarterly installments throughout the year with the balance payable or obtained at the end of the annual VAT return has been submitted.
VAT threshold for this system is a company with a turnover not expected to exceed 1.25 million.
The main benefit of the annual accounting scheme is to smooth VAT payments over the year.
Vat Cash Accounting Scheme
Under the VAT cash accounting system of VAT return and the obligation to pay VAT is based on the date of sale was received and when the purchases were paid rather than tax invoice level.
VAT threshold for the cash accounting scheme is a company with a turnover excluding VAT of the 1.35m.which £ can be extended to existing users turnover of £ 1.6m and left in place for up to 6 months after the VAT threshold has been lost .
Post a VAT Cash Accounting system can require companies to record sales and purchases on cash received and paid basis and adjust accounting for accruals. Also, sales and purchases can move into accounting based on the tax invoice points and a quarterly adjustment made for debtors and creditors at the beginning and end of each quarter. Such changes accounting would not be suitable for everyone.
Vat Retail Schemes
Retailers sell the public can not easily be able to produce VAT invoices to individual customers and there are various VAT retail schemes available Customs & Taxes website that retailers can adopt.
The main benefit of the VAT retail scheme are falling from each customer is issued a VAT invoice unless requested.
Vat retail schemes can be used in conjunction with both flat rate schemes and annual tax accounting system.
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