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VAT

You need to decide if you want to register or need to register for VAT. Whilst registration brings additional administration it may be advantageous for you to register under certain circumstances. VAT registration is compulsory if the value of your taxable supplies exceeds or is expected to exceed £82,000 in a 12 month period.

To register for VAT you must complete a VAT1 form.

There are a number of VAT schemes available for you to possilbe consider. VAT can be calculated on an accrual basis, the VAT needs to be accounted for sales and purchases based on taxation date, normally the invoice date. The cash basis differs in that the VAT is accounted for on the actual date of payment. There are also flat rate schemes where the VAT is calculated based on a fixed percentage of the total sales. The percentage varies from industry to industry.

It may be worth taking professional advice before you decide on the scheme you want to adopt. There are also restrictions for certain schemes which will prevent adopting a particular scheme, eg turnover of business.

As a VAT registered business you will have to complete a VAT return (VAT 100 form) for each VAT period which is normally every three months. The VAT 100 details how much VAT you have charged your customers, how much VAT has been charged by suppliers, and the amount of VAT to be paid to HMRC or the amount that is owed by HMRC.

Normally a VAT 100 form is sent out towards the end of the VAT quarter. This must be returned with the appropriate VAT payment no later than the end of the month following the VAT quarter.
 

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