What is vat return?

VAT stands for Value Added Tax and the companies that have registered for VAT with HMRC are liable to pay VAT. The condition to register for VAT is based on threshold set by the HMRC.

If your taxable income exceeds £85,000 in thirty days period, then it is compulsory for you to register for VAT. You can also register voluntary if you are sure that your income in the next 30 days period will exceed £85,000.

The VAT return can be dealt with on a monthly, quarterly or annual basis. It details your earnings, expenses and the amount of VAT that corresponds to the products and services that you've sold or purchased. The difference between the two determines whether or not you'll be expected to pay more or claim money back.

What needs to be included in the VAT return?

The VAT registered businesses need to make a VAT return for every VAT period. However, smaller business can make simple arrangements such as yearly VAT accounting schemes. In case of typical retail sales there is not a fixed VAT invoice and it is the date of supply which is considered the tax point. Usually, the standard VAT rate is 20% however, the VAT return is estimated according to the goods and services which are as follows:
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-> 20% on most goods and services
-> 5% on some items such as children's and food items
-> 0% on children's clothes and food items

When is the deadline for filing a VAT return?

For the standard VAT Accounting Scheme:

-> If you file quarterly, the deadline is one calendar month and seven days after the end of the VAT period.
-> If you file annually, the deadline is two calendar months and seven days after the end of the VAT period.

For the VAT Annual Accounting Scheme:

-> You’re required to make advance payments towards your VAT bill based on your estimated annual liability, and you will file one VAT return each year.
-> The deadline for filing this return is two calendar months and seven days after the end of the VAT period.

How can we help?

If you’re struggling to make sense of your VAT return, our team can provide the expert assistance you need. Our VAT return services can help:

-> Calculate the amount of VAT payable to or redeemable from HMRC
-> Prepare and submit VAT returns within the applicable deadlines
-> Ensure compliance with all laws and regulations surrounding VAT
->Avoid potential inaccuracies that could lead to a surcharge or penalty
-> Minimise the time you spend dealing with issues relating to VAT
->Advise you on any relevant exemptions or VAT inspections
-> Support you in meeting the requirements set out by the Making Tax Digital scheme

What VAT scheme should you use?

That depends on your business’s turnover and its cash flow needs. Here is an overview of some of the most common VAT schemes in the UK:

Standard – Under this scheme, businesses charge VAT on their sales and can reclaim VAT on their purchases, subject to certain restrictions.

Cash – This scheme allows businesses to account for VAT based on cash received and paid rather than on invoices issued and received.

Annual – This scheme allows businesses to make one VAT payment based on the estimated annual VAT liability.

Flat Rate – This scheme allows businesses to pay a fixed percentage of their turnover as VAT rather than calculating the actual VAT on each transaction.

Frequently asked questions about VAT

What is the UK VAT registration threshold?

The current VAT threshold is £85,000. If your turnover for which VAT applies goes over this, you are required to register for VAT.

Advantages and disadvantages of VAT registration

It may be advantageous to register for VAT voluntarily to take advantage of things such as repayments of VAT because when you’re registered you can charge VAT on business taxable supplies and goods (output tax) and you can reclaim VAT on your business purchases (input tax). If more input tax has been paid than output tax, HMRC will refund the difference. This can be useful at the start of a business when most business purchases are made.
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Being VAT registered may also offer your business more credibility, and if your supplies are zero rated, you can still reclaim VAT on the business purchases, resulting in a refund from HMRC. But this must be weighed up against the increased workload because once VAT is registered, your business must account for output tax on all taxable supplies, keep proper VAT records and accounts, and send in VAT returns when requested to do so by HMRC.

What is FRS (flat rate scheme)?

An alternative to calculating VAT where you instead apply a flat rate percentage to your total turnover. This makes things simplifier but could mean you end up handing over more VAT than you would otherwise.

Could we claim input VAT on expenses occurred before the VAT registration?

You can generally reclaim VAT on goods you bought up to 4 years before you registered for VAT and services you bought up to 6 months before you registered as long as the following conditions are met:
-> The goods were bought by you as the entity that is now registered for VAT
-> The goods are for your VAT taxable business purpose
-> The goods are still held by you or they have been used to make other goods you still hold

You cannot reclaim VAT on these goods:
-> Goods that you have completely used up before you registered for VAT (e.g. petrol, electricity or gas)
-> Goods that you have already sold or supplied before being VAT registered
-> Goods that relate to supplies you make that are exempt from VAT

You can reclaim VAT on services you bought during the 6 months before you registered for VAT if the following conditions are met:
-> The services were bought by you as the entity
-> The services are for your VAT taxable business purposes

You cannot reclaim VAT on these services:
-> Services that relate to goods you disposed of before you were VAT registered
-> Services that relate to goods or services you supplied that are exempt from VAT

If you want to claim pre-registration VAT on goods and services you must have a valid VAT invoice or receipt for each item.

If you require any assistance with the calculation of pre-registration VAT for the completion of the online VAT form, our VAT team will be happy to help you.

Reclaiming Import VAT paid by courier

You should not claim back input tax without having the C79 in your possession. The courier should be completing a post import amendment which would allow them to amend the details of the import declaration .This would then produce a C79 for you.

VAT on goods supplied in UK, invoiced to company outside of the UK

Goods can only be zero rated when the goods are exported outside of the UK. If goods stay in the UK and are invoiced to any company outside of the UK, then you will need to charge VAT at 20%.

Claiming back VAT on imported goods for resale in UK

Yes, we'll be happy to sort out your books for you. Please, contact us now, and we'll help you get your accounts up-to-date. However, we may give you a separate quotation as it depends how much backlog there is to deal with.

Could we still claim input VAT with till receipts only, or without VAT invoice?

As you are VAT registered then legally any suppliers would need to provide you with a VAT invoice if you request it. You will need this as evidence to reclaim the VAT as input tax. They can also issue you with a retailers invoice which is sufficient for input tax recovery if the value is below £250.

Reverse Charge VAT for online marketplace

If the marketplace charge you fees and they are based overseas then the transaction will be subject to the reverse charge by yourself.

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VAT accounting services

What JK Bookkeeping has to offer

What is vat return?

What needs to be included in the VAT return?

When is the deadline for filing a VAT return?

How can we help?

What VAT scheme should you use?

Frequently asked questions about VAT

What is the UK VAT registration threshold?

Advantages and disadvantages of VAT registration

What is FRS (flat rate scheme)?

Could we claim input VAT on expenses occurred before the VAT registration?

Reclaiming Import VAT paid by courier

VAT on goods supplied in UK, invoiced to company outside of the UK

Claiming back VAT on imported goods for resale in UK

Could we still claim input VAT with till receipts only, or without VAT invoice?

Reverse Charge VAT for online marketplace

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