Value Added Tax is a tax incurred when sales are made by Companies and Individuals in the United Kingdom who are VAT registered.
If VAT registered VAT will be added to sales that are made
There are three different rates for VAT in the UK, these are:
– Standard Rate 20%
– Reduced Rate 5%
– Zero Rate 0%
You can also have situations where sales made will be exempt from VAT and completely excluded from VAT.
Once registered, your sale to your customer will be made up of the amount due for services provided plus the VAT amount, which will either be 20%,5% or 0% of the amount due.
The VAT will be collected by you on your sales then paid over to HM Revenue & Customs.
Every month or Quarter (every three months) a VAT registered business must prepare what is called a VAT Return, this shows how much VAT has been charged on sales and how much has to be paid over to HMRC.
HMRC have strict penalties in place for late lodgement of VAT Returns.
You will also be-able reclaim VAT on most of the expenses you pay for which relate to the running of your business.
The final amount due to HMRC will be; VAT on sales minus VAT on allowed expenses.
Your business must register for VAT if:
Turnover has been above £73,000.00 for the previous twelve months, this amount is known as the “VAT Threshold “
Or if you believe that you will go above the threshold in the near future.
We have been carrying out VAT registrations for many years, whether that’s been using the basic VAT1/2 forms or more recently registering using HMRC online services.
Please note there are certain circumstances where online registration may not be allowed, for example:
Group Company Registrations
If you do business internationally