VAT

Quartely VAT Returns £150.00

You must register for VAT with HM Revenue and Customs (HMRC) if your business’ VAT taxable turnover is more than £82,000. You can register voluntarily if it’s below this, unless everything you sell is exempt.

You can only charge VAT if your business is registered for VAT.
VAT is charged on things like:

  • Business sales - eg when you sell goods and services
  • Hiring or loaning goods to someone
  • Selling business assets
  • Commission
  • Items sold to staff - eg canteen meals
  • Business goods used for personal reasons
  • ‘Non-sales’ like bartering, part-exchange and gifts

These are known as ‘taxable supplies’. There are different rules for imports and exports and charities. There are 3 different rates of VAT and you must make sure you charge the right amount. The thresholds for registering for VAT or joining a VAT accounting scheme from 1 April 2015.

The thresholds for registering for VAT or joining a VAT accounting scheme from 1 April 2015.

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VAT Thresholds

Circumstance Threshold
VAT registration £82.00
Registration for distance selling* into the UK £70.00
Registration for bringing goods into the UK from the EU** £82.00
Completing simplified EC Sales List *** £106,500 or less and supplies to EU countries
of £11,000 or less

* Distance selling occurs when a VAT-registered business in one EU country supplies and delivers goods to a customer in another EU country who isn’t registered for VAT. You are distance selling into the UK if:

  • You’re outside the UK but in another EU country
  • You sell goods to customers in the UK or Isle of Man who aren’t VAT-registered
  • You deliver the goods or arrange for their delivery

** When moving goods from European Union (EU) countries, you need to get a commodity code and pay VAT, but not import duty.

*** VAT registered businesses in the UK who make supplies of goods and services to a customer who is registered for VAT elsewhere in the EU must report them to HMRC.

You submit the details on what is known as an EC Sales List (ESL), this contains details of:

  • Your customers
  • The relevant country code
  • The value of the goods or services
Compulsory VAT registration

Compulsory  VAT registration

Your VAT taxable turnover is more than £82,000 in a 12 month period

You receive goods in the UK from the EU worth more than £82,000

You expect to go over the threshold in a single 30 day period

Voluntary VAT registration

Voluntary  VAT registration

You can register voluntarily if your business turnover is below £82,000. You must pay HMRC any VAT you owe from the date they register you.


 VAT-registered businesses:

    • Must charge VAT on their goods or services
    • May reclaim any VAT they’ve paid on business-related goods or services

If you’re a VAT-registered business you must report to HM Revenue and Customs (HMRC) the amount of VAT you’ve charged and the amount of VAT you’ve paid. This is done through your VAT Return which is usually due every 3 months. There are 3 different rates of VAT and you must make sure you charge the right amount.

 


VAT rates for goods and services

Rate % of VAT What the rate applies to
Standard 20% Most goods and services
Reduced rate 5% Some goods and services, eg children’s
car seats and home energy
Zero rate 0% Zero-rated goods and services,
eg most food and children’s clothes

VAT Cancelation/Vat Deregistration £38.00

You must cancel your registration if you’re no longer eligible to be VAT registered. For example:

  • You stop trading or making VAT taxable supplies
  • You join a VAT group

You can ask HM Revenue and Customs (HMRC) to cancel your registration if your VAT taxable turnover falls below the de-registration threshold of £80,000. You must do this within 30 days of your reason for cancelling the registration or you may be charged a penalty.

It usually takes 3 weeks for HMRC to confirm your de-registration and the official de-registration date. This is either the date when the reason for your cancellation took effect (e.g. when you stopped trading), or the date you asked to de-register if it’s voluntary.

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FLAT VAT

There are several VAT schemes so it’s important to do your research and ensure that you apply the right one for your business, since the alternatives relate to specific trade sectors and turnover. Some of these VAT accounting schemes have been designed for specific trade sectors. Others have been designed to deal with more general business issues. Some of the schemes can be used together.

These schemes are:

  • Annual Accounting Scheme
  • Cash Accounting Scheme
  • Flat Rate Scheme
  • VAT schemes for retailers
  • Margin schemes for second-hand goods, art, antiques, collectibles
  • Tour Operators' Margin Scheme
VAT accounting scheme Threshold to join scheme Threshold to leave scheme
Flat Rate Scheme £150,000 or less More than £230,000
Cash Accounting Scheme £1.35 million or less More than £1.6 million
Annual Accounting Scheme £1.35 million or less More than £1.6 million
 

 

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Agnes FilipowiczCEO Director/Accountant
Patricia CharltonBookkeeper
 

Office Address

  • 370-372 West Road (Upstairs)
    NE4 9JY, Newcastle upon Tyne
    Phone: +44 (0191) 44 777 67
    Email: office@abs-service.co.uk

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