VAT Information for small businesses
- Vat registration threshold from 1st April 2018 - £85,000
- You should notify HMRC within 30 days of the end of the month in which the yearly limit was exceeded.
- Various schemes exist to aid cashflow and the administrative burden for small business, particularly:
Cash Accounting for VAT
Open to businesses with an annual turnover below £ 1.35m. Output tax does not have to be accounted for until the customer has paid their invoice. This is particularly useful for businesses who have to offer credit terms to their customers.
Annual Accounting for VAT
Again this is for businesses with a turnover under £ 1.35m. The previous year's vat liability is paid in 10 installments throughout the year, the first payment 4 months after the start of the year and the final balancing payment ( along with the annual Vat return) to be made within 2 months of the year end.
Optional Flat Rate Scheme
Available to businesses with a net annual turnover of under £150,000. Vat is calculated by applying a fixed percentage to sales. The percentage depends on which trade sector the business operates in. Detailed analysis should be carried out to ascertain any possible benefit to the business and this may prove to be as time consuming as the completion of regular Vat returns.
I'm happy to maintain Vat records and complete Vat returns on your behalf. Alternatively I can assist you in setting up a bookkeeping system which will allow you to complete your own Vat returns.
The Vat Scale charge means that it is rarely worthwhile reclaiming the input tax on fuel receipts for vehicles which have an element of private use. Many businesses reimburse business use of a private vehicle at HMRC's approved rate (presently 45p per mile for the first 10,000 miles). It is possible to deduct the Vat element of this expense on your Vat return and many traders often overlook this fact.