A LIMITED COMPANY needs to register for VAT with HMRC when they reach £81,000 turnover and submit a VAT return every quarter. To ensure that you get this VAT return right, it is recommended that you use an accountant.

Although you could complete your VAT return yourself, it is not as simple as you might think. There are many VAT rules e.g. some services are VAT-exempt while others have a reduced VAT rate of zero or 5pc.

There are also 3 VAT schemes to choose from and choosing which one suits your business is critical to ensuring good cash flow for your business.

Scheme 1 – Standard VAT Accounting

  • Standard VAT is 20% which means that you claim VAT on purchases made
  • Vat returns are submitted quarterly
  • This is completed online and must show output and input tax for that quarter
  • You can reclaim VAT for invoices raised in that quarter

Scheme 2 – Flat Rate VAT Scheme

  • Provided as an incentive to simplify taxes allowing you to charge VAT on invoices at 20% but only pay HMRC at a lower rate
  • For example, IT Contractors have a FLAT rate of 13.5% in their 1st year of trading and 14.5% after this
  • This ensures that extra income is raised by contractors
  • Certain thresholds exist and your accountant will aid you with staying within this boundaries

Scheme 3 – Cash Accounting Scheme

  • If your turnover is more than £1.35 million you CANNOT use this scheme
  • This scheme is advantages for businesses that pay VAT only when clients have paid for goods/services
  • However, VAT cannot be claimed for goods bought for the company if they have not yet been paid for
  • This is completed online and must show output and input tax for that quarter
  • Remember that VAT cannot be paid for purchases/services that have not been paid for

So make sure you consider all VAT scheme options with your accountant before deciding. Hence, using an accountant to complete VAT returns and providing you with invaluable advice may pay you in the long run.

VAT Accountants London, Hounslow & Kingston

All our accounting packages include quarterly VAT returns and are fixed monthly fees,  view our prices or  schedule a meeting.

All our packages also include a free software of your choice to ensure your VAT return is accurate. Our dedicated accounts will ensure you never miss a VAT return.