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VAT Returns

You probably know what Value Added tax – more commonly known as VAT – is. It’s the tax some businesses pay on certain goods, services and supplies bought and sold in the UK. But just because you’re a business owner doesn’t mean you automatically know all the rules surrounding VAT – or have time to spend filing VAT returns every three months. This is where QAccounting comes in. We are a team of experts who know VAT inside out – and are here to help. At QAccounting, we offer a full range of VAT services to our business owners, from initial registration, to the filing and submission of your business’s VAT returns on an ongoing basis.

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Need to Submit a VAT return? We can assist! We submit VAT returns, do VAT reconciliations and assist with VAT audits.

Who needs to register for VAT?

In the UK, all businesses with an annual turnover of more than £85,000 must register for VAT. In some cases, smaller businesses can benefit from registering for VAT even if their turnover is below the £85,000 threshold. This is a tactical business decision which can end up saving tax when it comes to claiming back a VAT reduction on items bought for business purposes.

It’s always best to check with an accountant to determine which VAT status would be most beneficial for your business. By having your VAT affairs handled by a QAccounting professional, you’re assured that VAT decisions such as status and scheme choices are made with your business’s future in mind.

After becoming VAT-registered, QAccounting can submit a VAT return on your behalf four times per year. For some companies, submitting VAT returns monthly and paying monthly liabilities is a better option as it reduces the size of each VAT bill – we can advise on which is best for you.

Is registering for VAT straightforward?

It is when you leave it to QAccounting. Once you’ve given authorisation and some relevant information, your dedicated account manager will set your business up with its own online VAT account and personal VAT registration number and handle all things VAT going forward – including registering you for the VAT scheme most beneficial for your business.

 

Which VAT scheme should I be using?

This depends on the nature of your business. If you’re not sure, or if you’re new to VAT, you can get advice from your dedicated QAccounting account manager on which is best for your business.

 

There are three main VAT schemes to choose from:

Flat rate scheme

If your business’s annual turnover is £150,000 or less, you can pay a fixed rate of VAT to HMRC which is a percentage of your total sales. This scheme is designed to be simpler for businesses with a smaller turnover. 

There are different rates for different trades – your accountant will be able to advise on what your rate will be and whether this scheme will save your business money.

Standard VAT

With this scheme you charge 20% VAT and calculate whether the VAT they have charged during each quarter is higher than the VAT that has been paid for business purposes. You will then need to pay the difference quarterly to HMRC (or receive a VAT refund). Your QAccounting professional will help you keep track of every purchase and sale, to make calculating your quarterly return a simple process.

Cash accounting 

If your annual turnover is less than £1.35m, you can use cash accounting for VAT purposes. Unlike standard VAT accounting, with cash accounting you don’t count invoices issued when calculating VAT, but rather actual income and expenditure. This can be helpful with cash flow if you expect to be paid in instalments, for example.

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Do I need to use MTD?

Yes- MTD is now mandatory, so all VAT must now be filed online using HMRC’s Making Tax Digital (MTD) service. From April 2022 there is a £400 fine if you send a paper VAT return, so all UK businesses should now be ready and using MTD.

Under MTD, VAT returns must be submitted using HMRC-approved software such as Xero. QAccounting offers a Xero subscription as standard with all our monthly accounting packages, which makes it simple for our clients to capture their transaction data without having to rely on the clunky, error-prone spreadsheet method.

MTD exists to simplify VAT returns, but don’t be fooled. VAT tax is still a complex area and even if your business has never defaulted on a VAT submission – you could still be operating a VAT scheme which isn’t the most tax-efficient choice for your business.

With QAccounting you can be sure that your VAT submissions will be MTD-compliant, and you are getting the best advice on which VAT scheme is right for your company.

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When is VAT due?

When your company’s VAT returns are due depends on when the business first became registered for VAT. Your VAT return and any VAT due must be submitted 1 month and 7 days after the end of the accounting period – whether quarterly or monthly.

When QAccounting are handling your VAT returns, you don’t need to panic about upcoming VAT submission deadlines. Just sit back and relax, knowing that we are filing and submitting your VAT returns – always error-free and on time.

What happens if a VAT return is late?

There are various surcharges and penalties which apply if a business does not meet its VAT obligations. If HMRC have not received a VAT return by the deadline, or if full payment for any VAT due has not been received by the deadline, they record a ‘default’ against that business. 

This triggers a 12-month monitoring period during which surcharges will apply should any further default be recorded. This means that there may be an additional charge to pay to HMRC on top of the VAT owed by that business. After several defaults, the surcharge due on top of VAT can be as much as an extra 15%.

It’s not just late VAT returns and payments which can trigger penalties, either.

If HMRC sends you an assessment of how much VAT they think you have outstanding and it’s too low – you must tell them within 30 days or face a fine of 30% of the assessment on top.

So, it goes without saying that it pays to have a professional handle your VAT returns.

With QAccounting, your VAT returns will always be accurate and on time – which is one less thing for you to worry about.

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