Introduction to VAT
VAT is a tax that's charged on most business transactions in the UK. Businesses add VAT to the price they charge when they provide goods and services to:
- business customers - for example a clothing manufacturer adds VAT to the prices they charge a clothes shop
- non-business customers - members of the public or 'consumers' - for example a hairdressing salon includes VAT in the prices they charge members of the public
If you're a VAT-registered business, in most cases you:
- charge VAT on the goods and services you provide
- reclaim the VAT you pay when you buy goods and services for your business
If you're not VAT-registered then you can't reclaim the VAT you pay when you purchase goods and services.
Who charges VAT and what VAT is charged on
VAT-registered businesses add VAT to the sale price of most goods and services they provide.
When you must register for VAT
If you're a business and the goods or services you provide count as what's known as 'taxable supplies' (see 'What is VAT charged on' below) you'll have to register for VAT if either:
- your turnover for the previous 12 months has gone over a specific limit - called the 'VAT threshold' (currently £77,000)
- you think your turnover will soon go over this limit
You can choose to register for VAT if you want, even if you don't have to.
What is VAT charged on?
If you're VAT-registered you'll have to charge VAT on any goods and services that you provide in the UK that are VAT taxable. You charge VAT on the full sale price, even if you accept goods in part exchange or through barter instead of money. (Source: HMRC)
We can register, complete, file and submit your VAT returns.
VAT is complicated and continuously changing. Is crucial to know what rate to use and, what sort of things you may claim VAT back. VAT penalties are now applied by HMRC for mistakes as well as late returns. Preparing and correctly filling VAT returns (monthly or quarterly) yourselves may take lots of your time, which could be used more efficiently for business or pleasure.
We can help you with your VAT submission, this can be:
- Apply for your VAT registration.
- Providing the bookkeeping for your VAT return
- Completing and filing the VAT return for you
