VAT can be daunting for many businesses.
We hear it all the time, and we get it.
We hear people that say…
I’m getting close to the VAT registration threshold and I don’t want to have to register for VAT.
And we say, “Go you for growing!”
Because registering for VAT is an inevitable part of growth when it comes to your business. Not wanting to register for VAT will ultimately stunt your growth. It means you are applying an invisible ceiling to the amount of turnover that you are able to generate (the current VAT registration threshold is £90,000 of turnover, from 6 April 2024).
So shift that mindset. If you want to continue to grow, then you have to register for VAT and submit your VAT returns (usually on a quarterly basis).
We also hear people say…
“I’m terrified of getting it wrong and HMRC VAT wading through my records”.
Yes, this is daunting, but if there are robust records and all filings are accurate and you have complete confidence in the data that is being submitted to HMRC, then suddenly, it doesn’t seem so bad.
This additional level of compliance can feel like a burden to the taxpayer, but letting TaxGem™ advise on your VAT position, and prepare and submit your VAT returns can give you the confidence that you need.
Different VAT Schemes
Most people understand VAT in its standard form; 20% on sales, less 20% on purchases – pay the difference over to HMRC. For many clients this will be the case, but there are many different VAT rules and schemes that may give you a better answer such as:
- The Flat Rate Scheme
- Margin schemes / Global Accounting Scheme
- Retail schemes
- Catering adaptation
- Partial exemption
- VAT reverse charge for Construction Industry
- Zero rated supplies for new builds / certain adaptations
- Reduced rate (5%) supplies for conversion of residential dwellings into HMOs
Depending on the type of business you operate and the current level of turnover, one of the alternative schemes may be more appropriate. We can conduct a full review of your business and advise on the eligibility and efficiency of other appropriate VAT schemes.
VAT Reviews
For clients who are concerned about not being able to meet VAT payments (which by the way, if this is you… you are not alone!) we offer a structured 3 step review to determine the underlying reason for the cashflow issues, comprising:
- Pricing review
- Credit control / bad debts review
- Expenses review (specifically considering expenses with no input VAT to reclaim).
From a compliance perspective, most VAT returns must now be filed via Making Tax Digital (“MTD”) compliant software. Which of course if one of the features of Sage.