Quarterly VAT Returns...
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VAT, or Value-Added Tax, is charged on most of the goods and services traded in the UK, and some from abroad, too.
It applies to businesses whether they're trading to individual customers or other companies.
If you are a VAT-registered business you can generally claim back VAT that has been paid for materials or other goods. Depending on your business, if you aren't registered, you might be missing out.
The first thing to be aware of is that there are two types of VAT registration, Flat Rate Scheme (FRS) or Standard Rate and both types need to file quarterly returns. We can help you to work out which type, or neither, will be most appropriate for your business. There is another set of regulations called VATMOSS that applies to the selling of digital services in the EU that came into force in Jan 2015.
Not all goods and services are treated equally when it comes to VAT, with some having a lower rate applied and others being exempt altogether.
It’s a fine line sometimes - a cake is zero-rated even if it is covered in chocolate, whereas a biscuit is 20% VAT rated even if it is wholly or partly covered in chocolate. So it's definitely worth staying on the ball when it comes to the rates that apply to your business.
While you're generally free to register your business for VAT even if you don't have to, there are situations in which it's compulsory. Basically, if you're dealing in goods or services that VAT applies to, you'll need to register within 30 days if your turnover hits the "VAT threshold".
If you do register for VAT, there's some paperwork to keep up with. You'll need to fill in a VAT return, usually each quarter, and let HMRC know both the amount of VAT that you've charged on sales and the amount you've paid out on your own purchases.
Once the numbers are crunched, you'll either get a bill or a rebate, depending on the difference between what you've charged and what you’ve paid.
Our Clear Books software has a dedicated VAT module that lets you see what your VAT bill will be each quarter and any rebates to which you are entitled.
VAT can be extremely complex so talk to us about your specific business set up.
As with all tax-related matters, solid guidance goes a long way toward making sure you never miss out or get tripped up.
VAT is the single issue that we get most questions about.
No two businesses are exactly alike, so the advice we give is always tailored to the specific situation you're in. However, to get you started, here are the most common things we get asked.
Can I claim back VAT when I arrange accommodation, food or entertainment for a client or potential customer?
Generally, no. HMRC considers these expenses "business entertainment" and won't let you claim the tax back.
Can I claim back VAT for motor fuel if my vehicle is also used for non-business journeys?
This depends on a number of factors, for example if you are Sole Trader or Limited Company, who own the vehicle, etc.
Do I need to charge VAT on free samples, trials or gifts?
As long as the samples/trials are genuinely free for business purposes, or as long as the cost of what you give to any one customer as a gift isn't over £50 in any twelve-month period, you won't need to charge VAT on either.
Are there any situations where I can't register for VAT?
You can register as long as you're trading in something that counts for VAT, and HMRC considers you to be "in business".