This is where I send a report to HM Revenue and Customs every quarter which discloses the amount of sales tax that has been collected and purchase tax that can be reclaimed.


Monthly PlanFrom £30/month

VAT is known as one of the most complex aspects of the tax system. There are people who spend their entire careers trying to work out the VAT rules. Did you know there was a huge court case on the VAT classification of Jaffa cakes based around whether they were a cake or a biscuit with huge implications on the VAT treatment? Ladies and gentlemen… Our tax system.

What is VAT?

You pay value added tax (VAT) on most of the things you buy as a consumer. As a business it is compulsory to register for VAT when your rolling 12 month turnover reaches £85,000, from then you must then submit quarterly VAT returns to HMRC. You must also start charging your customers VAT if what your business supplies is a vatable supply.

You may want to register for VAT before you hit the VAT registration threshold , there are a few circumstances in which this might be beneficial for your business . being that registered also means that you can reclaim any VAT you have paid on purchases whereas you unable to do that before you were that registered. Your VAT returns are due a month and seven days after the VAT quarter and the VAT payment should be paid by that date too.

VAT Fact

Did you know that you could actually buy your next helicopter or airship at 0% VAT. Now there’s a bit of consumer advice you didn’t bargain for. (exceptions apply)

Special VAT Accounting schemes:

Flat Rate VAT

Flat rate VAT is fairly simple but it’s not always the easiest to explain, here are the main features of flat rate VAT :
– You still charge VAT to your customers at the rate you normally would (20%, 5% or 0%)
– Instead of calculating VAT on every transaction, you only pay based on a flat rate of your turnover at a lower percentage
– You cannot reclaim VAT on most purchases
– So for example, if you are registered on the flat rate scheme you have £50,000 in sales with £10,000 of VAT charged to your customers charged at the standard 20%. You have purchases of £10,000 + £2000 of VAT. Using standard vat accounting this would result in a liability of £8,000. However, using flat rate VAT (a marketing agency for example where the flat rate is 11%) take £60,000 (£50,000 plus £10,000) x by 11% = £6,600

Key points

– the VAT rate depends on what industry you are in
– you cannot register for the scheme if your turnover is more than 150,000

Cash Accounting

Cash accounting enables you to pay your VAT only when you get paid and you can only reclaim VAT when you have actually paid the supplier.

This can be great for your cash flow especially if your customers are not the best payers. if you have bad debt, you will never have paid the vat in the first place. However, in this situation it may be better to concentrate on putting in processes is to ensure that your customers pay you on time. we can help you with that too.

What about Making Tax Digital (MTD)

You may have heard the term making tax digital (MTD) being thrown around by accountants, at Gareth Lawrence we use industry leading software to prepare and submit VAT returns so you can rest assured that every VAT return is fully MTD compliant. You do not need to worry about anything there.

Our VAT service

Looking for a bit of advice? Give us a call and have a chat.

It can be tricky to navigate your way around it without an expert on hand.
We can help advise on VAT planning and administration, or we can just take the whole lot off your hands so you don’t even need to think about it.