VAT Return

Can I register voluntarily for VAT?

Yes, you can register voluntarily, even if your turnover is below the statutory registration threshold.

Not only can your VAT registration add credibility to your business, but it can also be advantageous if any of the following situations apply:

• If the nature of your trade means that your costs or purchases include VAT.
• If most of your customers are VAT registered and can claim back the VAT that you have added to your sales.
• If your supplies are mainly zero rated for VAT purposes.

However, if none of the above apply then it may be better to delay registration until you have to.
 

Our Advice regarding VAT Registration Issues:

• Never add VAT to your sales invoices UNLESS you are registered – to do so is a criminal offence!
• Avoid delay if you do need to register, otherwise you will incur penalties and interest charges, as well as having to account and pay over the VAT due from the time you should have been registered. Unfortunately, you may not be able to recover the outstanding VAT from your customers.

If you do find yourself in this situation please contact us immediately for assistance. The longer you delay the higher the penalties will be.

Special Schemes

Most registered traders simply add VAT, where appropriate, to their sales and pay this over to HMRC after deducting any VAT input tax paid to suppliers.  This is usually dealt with through a quarterly VAT return.

For small businesses this can cause cash flow problems. You may have to pay over VAT added to sales invoices that have still not been paid by your customers.
 

HMRC have recognised this and have created a number of “Special Schemes” to alleviate some of the cash flow problems small business may face, especially when they are just starting-up.

The most helpful schemes are:

• Cash Accounting – If your turnover is within the limits for the scheme you will only need to pay VAT to HMRC when you are paid by your customers. This is a significant advantage for businesses that have to grant extended payment terms to their customers.
• Flat Rate Scheme – Traders eligible to join this scheme can simplify their VAT accounting by applying a flat rate percentage to their sales and paying this amount to HMRC.
• Annual Accounting – With this scheme you agree an annual liability, based on the previous year's figures, and pay this over on an installment basis. At the end of each year a final return is submitted and any balance due is paid or overpayment refunded.
• Retailers Schemes – Ordinarily, registered traders are required to keep detailed records of every transaction. For retailers this could prove to be a time-consuming chore. To avoid this, affected businesses can use one of the schemes set up with retailers in mind.

Also, check out our VAT calculator! It’s simple and can easily calculate the amount of VAT in a transaction whether it was included or excluded.

TaxAssist Accountants

5 High Street
Congleton
Cheshire

CW12 1BN

Tel: 01260 241080

Mobile: 07786 535128

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