VAT - GETTING IT RIGHT AND THE BASICS
Filing your VAT can be a cumbersome task. We’ve presented some of the basics below and suggested ways to help small businesses ease the burden of their VAT returns.
WHAT IS VAT
Value Added Tax is charged by businesses on the value of their goods and services.
If at the end of your VAT period you have charged more VAT than you have paid you will pay the difference to HMRC.
In some circumstances you will have paid more than you charge, in which case HMRC will refund you the difference.
When selling goods or services in the UK it is important to charge the correct amount of VAT to your customers.
The VAT must be shown on your invoices or sales receipts and your VAT number must also be shown.
The standard rate of VAT is 20% but the rate can vary depending on what goods and services a business provides.
The reduced rate of 5% charged on specific items such as children’s car seats or even some new build houses.
Zero rated VAT is charged on other specific items, the most common examples being books and children’s clothing.
Most goods you export from England to outside the UK will also be zero rated.
Although the rate of VAT is zero, these sales still need to be declared on your return.
CLAIM BACK THE VAT YOU’VE PAID
During the course of your business, you will be incurring VAT on the purchases you make, whether it be buying stock from your wholesaler or paying your accountant.
You must keep a record of the VAT paid during the period and report this on your VAT return.
AUTOMATION & RECORD KEEPING
The days of maintaining your paper records are over. Software is available which collects, stores, sorts and reads the VAT payable on your purchases. This can integrate with your bookkeeping software to make the whole process seamless and save you and your small business time.
We use Dext and Xero to help our clients streamline their bookkeeping process.
KALA ATKINSON ARE A FIRM OF CHARTERED ACCOUNTANTS BASED IN EAST LONDON.
IF you need help registering for VAT, preparing your VAT returns or claiming back pre registration VAT we can help.
We have over 30 years experience in helping individuals and small businesses navigate their compliance whilst providing the financial tools in order to grow.
For more information on how we can help you and your small business contact us today.