VAT

What is VAT

Value Added Tax (VAT) is a consumption tax levied on the value added to goods and services at each stage of production or distribution. It is a tax that is ultimately borne by the end consumer.

Why Choose Us

• We stay updated with the latest changes and ensure your business remains fully compliant with all VAT laws, reducing the risk of penalties and errors
• With our in-depth understanding of VAT laws and regulations, we can identify potential VAT savings opportunities for your business.
• We streamline your VAT processes, ensuring efficient VAT returns filing and helping you optimize your VAT-related expenses.

We can help to ensure that you comply with the regulations and that overpayments are not made. To help you manage this complex area, we provide an efficient, cost-effective VAT service, which includes:

• assistance with VAT registration
• advice on VAT planning and administration
• use of the most appropriate scheme
• VAT control and reconciliation
• help with completing VAT returns
• planning to minimise future problems with HMRC
• negotiating with HMRC in disputes and representing you at VAT tribunals if required

More information on VAT

VAT Rates: In the UK, there are different VAT rates:

• Standard Rate: The standard rate is 20% (as of my last update in September 2021), which applies to most goods and services.
• Reduced Rate: Some goods and services are subject to a reduced rate of 5% (e.g., domestic fuel, children's car seats).
• Zero Rate: Certain goods and services are subject to a 0% rate (e.g., most food items, books, children's clothing). While VAT is charged at 0%, businesses can still recover input VAT on related expenses.
• Exempt: Some goods and services are exempt from VAT (e.g., certain financial services, medical services). Businesses cannot charge VAT on exempt supplies, but they also cannot recover input VAT on related expenses.

• VAT Registration Threshold: Businesses must register for VAT with HM Revenue & Customs (HMRC) if their taxable turnover exceeds the VAT registration threshold. As of my last update, the threshold was £85,000 in the UK. If your turnover is below the threshold, VAT registration is optional, but you can still choose to register voluntarily.
• VAT Registration and Deregistration: When you reach the VAT registration threshold, you must register for VAT within 30 days. If your turnover falls below the deregistration threshold (currently £83,000), you can apply for VAT deregistration.
• VAT Returns: VAT-registered businesses must submit VAT returns to HMRC, usually on a quarterly basis. The VAT return shows the total VAT charged on sales (output tax) and the total VAT paid on purchases (input tax). The difference between output tax and input tax is the amount of VAT owed to or reclaimable from HMRC.
• Flat Rate Scheme: The Flat Rate Scheme is an alternative way for small businesses to calculate their VAT liability. It simplifies VAT accounting by applying a fixed flat rate percentage to gross turnover, with limited input VAT recovery.
• VAT on Imports and Exports: Special rules apply to the VAT treatment of goods and services imported into or exported from the UK. VAT on imports is usually paid at the point of entry into the country, while exports are generally zero-rated.
• Making Tax Digital (MTD) for VAT: VAT-registered businesses with taxable turnover above the VAT threshold must comply with Making Tax Digital for VAT. This means keeping digital records and using compatible software to submit VAT returns.
• VAT Inspections and Penalties: HMRC may conduct VAT inspections to ensure compliance. Non-compliance with VAT rules can result in penalties and interest charges.
• VAT for E-commerce and International Transactions: If your business is involved in e-commerce or international transactions, there may be specific VAT rules to consider.