What is VAT?
Value Added Tax, also known as VAT, is worked out by the sale of goods and services supplied by a UK business.
The types of VAT rates
There are four VAT rates brackets that a business will come under. They are standard rates, reduced rates, zero rates and exempt supplies.
Standard rates – the current standard rate is 20%, which is applied to the goods and services that are not included in the other 3 categories.
Reduced rates – 5% of reduced VAT is applied to goods and service that include, mobility aids for the elderly, fuel and power for homes and charities and children’s booster seats.
Zero rates – this is applied to most food (but excludes restaurant food), baby clothes, prescriptions, newspapers, books. Businesses that only sell goods and services that are zero-rated may not need to register for VAT, but must have applied for exemption.
Exempt supplies – are goods and services that do not receive a VAT charge, for example education, insurance and doctors and dentistry services. You are unable to register for VAT if you sell exempt supplies only and may struggle claiming back input tax if you are registered, but have some exempt supplies.
Our team of friendly accountants can assess your business and work with you to make sure you meet your VAT needs, ensuring you avoid penalties faced from not meeting your businesses VAT rates and guidelines.
The VAT Flat Rate scheme
How much a business pays/claims from the HMRC depends on the difference of how much VAT is charged to the customers of the business and the VAT the business pays on purchases.
Businesses with a turnover that excludes VAT and is £150,000 or less are eligible to apply to the HMRC for the Flat Rate scheme. Businesses can also register for VAT even if you’re under the turnover threshold of £83,000 in a rolling 12 month period, as sometimes this can be very beneficial financially when on the flat rate scheme.
The scheme includes: a fixed rate of VAT to pay the HMRC, you keep the difference of how much is charged to your customers and how much is paid to the HMRC and you’re unable to reclaim VAT on purchases.
We are able to go through with you, the criteria needed to apply for the Flat Rate scheme and to fill in the forms that are needed by the HMRC.
What our VAT service includes:
We offer assistance to businesses and individuals, when it comes to VAT to help them avoid facing risks and penalties. We also help new businesses get set up with the schemes and make it aware what your rates are.
There are also commercial benefits when it comes to clients and customers, as they assume that your business is doing well if it is already registered for VAT.
We can help your business with its VAT Accounting
Due to the complexity of VAT rates and the flat rate scheme, businesses often find it a strenuous task to face alone. Our team supply a VAT service that allows us to work alongside you, ensuring that you get the best out of what can be a stressful situation.
At H&H Accountants we offer a variation of accounting services that enable us to support your business every step of the way. We strongly believe in preventative advice, rather than advice given after an event, so get in touch today for more information.