VW Taxation Ltd
VAT Accountant Services
VW Taxation Guide to VAT
Value-added tax (VAT) is certainly the most complex and frustrating area of accounting when running a business. Since 1973, this indirect form of taxation sees business owners handle the burden of calculating and paying VAT instead of the consumer.
Registration, choosing which VAT scheme to register for, calculating VAT, and settling VAT accounts are enough to qualify as a part-time job in itself, which is why utilizing the services of a professional VAT accountant can ease much of the burden associated with this complex tax system.
This guide will serve to explain a bit about VAT and its complex procedures, as well as to explain the benefits of hiring a VAT accountant to navigate this confusing system.
Read on to find out more.
What Does a VAT Accountant Do?
If you operate a business that provides taxable goods to consumers, you will have to pay a VAT tax rate on all goods after a threshold of £85,000 has been met. If you have overpaid VAT to HMRC that exceeds the amount you may have paid in VAT to receive your goods, VAT returns on this tax must be assessed on yearly accounts.
VAT accountants spend time working to ensure your company pays the right amount of VAT to HMRC, as well as to ensure that all VAT registration procedures have been met for the best VAT scheme for your business. VAT accountants will need access to your business records to ensure that the proper VAT taxes are being collected at the required rate for reporting to HMRC.
VAT accountants can also offer crucial advice throughout the tax year and help answer all of your questions to reduce time and frustration when working with the complex procedures associated with VAT. This kind of help from a VAT team is necessary due to the sheer number of goods and services that correspond to VAT.
Additionally, with the passage of the “Making Tax Digital” Act in 2019, VAT returns are now required to be calculated and submitted digitally and a company will not be able to submit its returns by completing them on HMRC online services. VAT returns must be submitted using MTD functional compatible software.
In short, navigating the VAT process can be difficult and takes a great deal of time to get right. VAT accountants can help by handling all of these accounting procedures and ensuring they run smoothly and accurately. A VAT accounting team makes perfect sense for any business that offers goods and services that are frequently taxed by VAT.
Can I Claim VAT Back on Accountancy Fees?
VAT accounting falls under the guidelines related to VAT tax on services. If your business or company utilises accounting help or the wider use of a VAT accounting team, you will likely be able to claim VAT back on these services through your required VAT returns.
HMRC is generally very lenient on a business recouping accountancy fee costs that correspond with VAT, you will need to make sure that your normal accountancy fees are clearly and accurately documented with statements showing the fees paid.
Additionally, any help you receive on tax-related purposes associated with VAT can also be claimed back if the fees associated are small. An accountant can also provide advice and help with this matter as part of your normal business structure with the accountant.
Is There VAT on Accountancy Fees?
A controversial aspect of accounts with Companies House is that a business is completely transparent to the general public wishing to view the accounts. The services provided by Companies House are essential for transparency, yet it is a bit of an intrusion for the company at the same time.
Accounts with Companies House are available to view on their website. Simply log in and look up your company to the see the accounts with Companies House, which have been reviewed and made part of the public record.
What Is Included in a VAT Return?
VAT returns are similar to ordinary company accounts or year end accounts in how the return is basically a summary total showing your sales and purchases and the VAT relating to them. VAT registration is required to process each VAT return, whether you choose to file on your own or have an accountant file on your behalf.
The return will include the total of all of your business sales and the output tax that was paid on these sales. The return will also include a summary of all the VAT you charged, which will have to be paid to HMRC.
Similarly, the return will also include a total of all purchases you have made, which will also include any of the VAT that you can reclaim against these purchases for your business.
Is a VAT Return the Same as a Tax Return?
A tax return and a VAT return are two entirely separate returns. HMRC requires that tax must be settled in a separate return due to the complex procedures and oversight that goes into a VAT return.
VAT returns are also more commonly calculated during quarterly periods, whereas a typical tax return is usually filled out and filed at the end of a tax year.
What Months Are VAT Returns Due?
VAT periods are typically quarterly, though you can ask for a non-standard VAT period. If you are frequently paying a large amount of value-added tax which can consistently be reclaimed, you can make a request to HMRC to opt for monthly value-added tax payments as opposed to quarterly payments.
HMRC regulates VAT payments through a process known as an “accounting period.” This accounting period typically occurs every three months.
If you are ever in doubt about when your return is due, you can always ask your accountant or, check the HMRC website that handles value-added tax. The deadline for submitting the return online and paying HMRC are usually the same, 1 calendar month and 7 days after the end of an accounting period, and you will need to allow time for the payment to reach HMRC’s account.
Is a VAT Return the Same as a Tax Return?
A tax return and a VAT return are two entirely separate returns. HMRC requires that tax must be settled in a separate return due to the complex procedures and oversight that goes into a VAT return.
VAT returns are also more commonly calculated during quarterly periods, whereas a typical tax return is usually filled out and filed at the end of a tax year.
What Months Are VAT Returns Due?
VAT periods are typically quarterly, though you can ask for a non-standard VAT period. If you are frequently paying a large amount of value-added tax which can consistently be reclaimed, you can make a request to HMRC to opt for monthly value-added tax payments as opposed to quarterly payments.
HMRC regulates VAT payments through a process known as an “accounting period.” This accounting period typically occurs every three months.
If you are ever in doubt about when your return is due, you can always ask your accountant or, check the HMRC website that handles value-added tax. The deadline for submitting the return online and paying HMRC are usually the same, 1 calendar month and 7 days after the end of an accounting period, and you will need to allow time for the payment to reach HMRC’s account.
How Do I Fill in a VAT Return?
Filling in a return requires knowing what each box and line means and understanding precisely what needs to be included in each section. If you ever need help with the process, always ask an accountant.
Include the VAT due on all goods and services you supplied in the period covered by the return. This is your ‘output VAT’ for the period.
Value-added tax may also be due for supplies outside the mainstream of your business. Some examples include:
- supplies to your staff
- gifts of goods that cost you more than 50 pounds, excluding the value-added tax
- commission received for selling something on behalf of someone else
- Value-added tax shown on self-billed invoices issued by your customer
As you can see, the process can get quite complicated, very quickly. An accountant can handle this process for you with the surety that each and every line will reflect the accurate information pertaining to your business.
What Happens if My VAT Return is Late?
If your return is late, HMRC will begin to charge penalties against the late return. You may enter a 12-month ‘surcharge period’ if you default.
If you default again during this time the surcharge period is extended for a further 12 months. You may have to pay an extra amount on top of the value-added tax you owe.
Additionally, if you submit a late return, you will not have to pay a surcharge if you pay your VAT in full by the deadline or have no tax to pay. If you are due a VAT repayment, HMRC will write to you explaining any surcharges you owe and what happens if you default again.
Meeting deadlines are important when submitting a value-added tax return. Always seek the advice of an accountant if you are unsure about how to figure out the deadlines.
Is There a Fine for Late Returns?
As previously mentioned, your surcharge is a percentage of the VAT outstanding on the due date for the accounting period that is in default. The surcharge rate increases every time you default again in a surcharge period.
Since these fines are even heftier than what is seen on a standard late tax return, meeting value-added tax deadlines is crucial to avoid these penalties.
How Do I File a Late Return?
You can still file a late return using compatible software if you have been placed into the Making Tax Digital requirement. HMRC will place the return in default and calculate the appropriate penalties accordingly.
Get Help From Us With Your Company Accounts
So, the process of filing your company’s accounts can be a bit daunting and complex. Running a business is already a monumental undertaking, therefore, allowing a tax and accounting specialist to oversee your accounts is a great way to relieve some of the work that comes with the process.
VW Taxation strives to make the accounting process as easy and streamlined as possible, that way you can focus on your business and not be burdened with the hassle of documenting and submitting your yearly accounts.
Talk to VW Taxation for VAT Return Advice
This process is very complicated, but we here at VW Taxation are thoroughly trained in handling all aspects that relate to value-added tax. We can provide advice for your business on what VAT scheme to register for, as well as help you every step of the way in reporting and VAT calculations.
Contact us today and allow one of our VAT accountants to make this process one less accounting protocol you have to worry about. All of our initial advice is free and comes with no obligation.
