Five Things to Know About VAT Accounting
If your company is already a VAT registered company in the UK, you probably know about VAT and must have been paying it on purchase of goods or services. You must have also heard about that this type of tax is also charged on the goods and services imported from countries outside the European Union (EU).
Apart from these details, you need to know more about VAT Accounting and should be clear about the following five things.
If your VAT taxable turnover or the purchased goods or services from EU is more than £81,000 per year, you must register for VAT. You can register for VAT online under the one VAT number and create a VAT online account which you need for submitting VAT Returns to HM Revenue and Customs (HMRC). On behalf of you, a VAT consultant
can be hired to this for you. Not only the consultant can advise you on the latest regulations, he can also keep your business on a positive note of HM Revenue and Customs.
VAT Accounting Schemes
Whenever a business registered for VAT invoice customers or when their own suppliers invoice them, they need to account for tax. HM Revenue and Customs has a number of VAT accounting schemes to simplify your accounting that will allow your business to save time and smooth the cash flow. You should seek the advice of experienced advisor for getting scheme that bests suits you and your business.
If you are registered for VAT, keeping records of all the paid or received tax is a must. The records must be complete, accurate and readable. You need to keep these records for at least 6 years for avoiding paying too much tax as there are penalties for poorly kept records.
If you do not know your responsibilities, you will put yourself further into the risk or even worse face VAT penalty system. When you have a consultant by you side, he will address your value added tax compliance issues, assess the risk and will take care of your value added tax responsibilities.
The late payment of the value added tax results in the penalties and surcharges. Surcharges are a percentage of the tax paid late. HMRC estimates this when they don’t have your return which is known as an ‘assessment’. Similarly, if your VAT return is inaccurate, HMRC is also liable to charge you penalties. The deliberate errors where concealment can be proved will result up to 100% fine.
You can visit and discuss with our accountants on how to manage your VAT accounting. For that, simply give us a call at 020 7060 9556.
If you want to learn more about Value Added Tax, click here