If you are a new business or even a growing one, the world of VAT, tax inspectors and audits can be an intimidating one. There are various schemes around to help businesses understand the various VAT regulations and compliance measures. However with phrases like flat rate and cash accountancy it can still be difficult for a business to know what approach is the best of their business. With this in mind it is no wonder that many businesses are turning to accountancy and VAT specialists for help.
There are 3 main VAT schemes which are available to businesses. The first of these in the cash accountancy scheme where any business can apply who has a turnover of £1.35 Million or less. In simple terms this scheme allows your business to only pay VAT on sales which you have been paid for. This can help prevent any potential issues with items such as bad debts and claiming bad debt relief.
The second scheme is known as flat rate scheme. This allows firms to calculate the net VAT by applying a flat rate percentage to their turnover. This is ideal for new businesses and is open to those with a turnover of less than £150,000. It does need to be remembered that this process does not allow for you to reclaim back VAT on purchases however this is taken into account when calculating your flat rate percentage. This process significantly reduces the time spent on VAT and accountancy issues, so although you still need to detail VAT in invoices there is no longer the requirement to record values such as the VAT charged to sales or associated with purchases.
The third and final scheme is the annual accountancy scheme. This means that your company only needs to submit one VAT return each year. Your businesses would be expected to pay 9 monthly interim payments which will be based on an estimate of the total amount VAT bill with the final balance (or refund) to be paid when the annual return is submitted. Firms with a turnover between £1.35 Million and £1.6 Million are eligible for this scheme which can significantly reduce a companies paperwork and help with the control of cash flow.
With these 3 schemes simplifying the process many businesses are now trying to handle their accountancy and VAT requirements in house. However with the fines for mistakes and discrepancies often totaling more than the value originally owed it can be reassuring for these businesses to access guidance on these issues. This is where accountancy and VAT specialists come into their own with the offer of services such as VAT Health Checks. These take the form of a mock VAT inspection or audit and can help a business to identify any potential issues and protect themselves in the future against complications with HM Revenue and Customs, offering a truly invaluable resource especially for new businesses.
There are 3 main VAT schemes which are available to businesses. The first of these in the cash accountancy scheme where any business can apply who has a turnover of £1.35 Million or less. In simple terms this scheme allows your business to only pay VAT on sales which you have been paid for. This can help prevent any potential issues with items such as bad debts and claiming bad debt relief.
The second scheme is known as flat rate scheme. This allows firms to calculate the net VAT by applying a flat rate percentage to their turnover. This is ideal for new businesses and is open to those with a turnover of less than £150,000. It does need to be remembered that this process does not allow for you to reclaim back VAT on purchases however this is taken into account when calculating your flat rate percentage. This process significantly reduces the time spent on VAT and accountancy issues, so although you still need to detail VAT in invoices there is no longer the requirement to record values such as the VAT charged to sales or associated with purchases.
The third and final scheme is the annual accountancy scheme. This means that your company only needs to submit one VAT return each year. Your businesses would be expected to pay 9 monthly interim payments which will be based on an estimate of the total amount VAT bill with the final balance (or refund) to be paid when the annual return is submitted. Firms with a turnover between £1.35 Million and £1.6 Million are eligible for this scheme which can significantly reduce a companies paperwork and help with the control of cash flow.
With these 3 schemes simplifying the process many businesses are now trying to handle their accountancy and VAT requirements in house. However with the fines for mistakes and discrepancies often totaling more than the value originally owed it can be reassuring for these businesses to access guidance on these issues. This is where accountancy and VAT specialists come into their own with the offer of services such as VAT Health Checks. These take the form of a mock VAT inspection or audit and can help a business to identify any potential issues and protect themselves in the future against complications with HM Revenue and Customs, offering a truly invaluable resource especially for new businesses.
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