VAT : OUTLINE
Taxation (TX)
SEED FINANCIAL ACADEMY
VAT
SEED FINANCIAL ACADEMY
VAT
- VAT Accounting and Refunds
VAT returns are normally 3 months long but traders who receive repayments can
opt for monthly.
Deadline for filing and payment online is one month and seven days after end of
quarter.
All traders are required to keep VAT records digitally.
VAT refunds are normally made within 10 days. Time limit for claiming overpaid
VAT are 4 years from returns due date.
Substantial traders with VAT liability exceeding 2.3 million p.a are required to
make monthly payments. Payments at end of month 2 and 3 of 1/24th of annual
liability of last year.
SEED FINANCIAL ACADEMY
VAT
- VAT Records
VAT records kept for 6 years
-Copies off all invoice
-Records of all outputs
-Records of inputs
-Copies of input VAT invoices
-VAT Account
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VAT
- VAT Invoice
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VAT
- Simplified VAT Invoice ( For consideration of GBP 250 or less)
Suppliers name address and VAT reg number
Date of supply
Description of goods or services acquired
The consideration of supply
The Rate of VAT
SEED FINANCIAL ACADEMY
VAT
- Default Surcharge
A default occurs if a VAT return is not submitted on time or a payment of VAT not
done. On the first default a surcharge liability notice is issued.
Surcharge period runs from notice date to 12 months anniversary of end of VAT
period to which default occurs.
If further surcharge occurs, period is extended by 12 months.
If it involves late payment of VAT, surcharge penalty is due. No penalty for
repayment or nil VAT.
SEED FINANCIAL ACADEMY
VAT
- Default Surcharge
1st default – 2%
2nd Default – 5% 3rd Default – 10%
No penalties at 2% and 5 % for amounts less than GBP 400
Where surcharge is 10% or 15% , penalty is higher of
1. GBP 30
2. The actual amount
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4th default- 15%
VAT
- Errors on Previous returns
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VAT
- Cash Accounting Scheme
Smaller business with Taxable turnover including zero rated of up to £1,350,000
p.a can choose cash accounting scheme. No offence in last 12 months and VAT
returns must be up to date. And leave the scheme if turnover exceeds £1,600,000
VAT calculated on basis of receipts and payments.
Advantage : Automatic relief for bad debts , do not have to pay output VAT until
payment is received
Disadvantages : No Input VAT can be claimed unless payment is made , not suitable
for business with lot of cash sales or zero rated supplies.
SEED FINANCIAL ACADEMY
VAT
- Annual Accounting Scheme
Smaller business with Taxable turnover including zero rated of up to £1,350,000
p.a can choose annual accounting scheme. No offence in last 12 months and VAT
returns must be up to date. And leave the scheme if turnover exceeds £1,600,000
VAT calculated on yearly basis within 2 months of year end.
Nine payments on accounts are needed at the end of month from 4th to 12th month
of 10% of VAT liability of last year. Balance is paid when filing is done. Business
may apply for quarterly payment of accounts.
SEED FINANCIAL ACADEMY
VAT
- Flat rate Scheme
Small business with Taxable turnover excluding VAT up to £150,000 p.a can
choose flat rate scheme. No offence in last 12 months and VAT returns must be up
to date. And leave the scheme if VAT inclusive turnover including exempt supplies
exceeds £230,000.
Flat rate % is applies to gross total turnover (inclusive of Zero rated and exempt
supplies) with no input tax recovered. % will be given.
Can be used with annual accounting scheme.
Not possible to join both flat rate and cash accounting scheme.
SEED FINANCIAL ACADEMY
VAT
- Flat rate Scheme
Small business with Taxable turnover excluding VAT up to £150,000 p.a can
choose flat rate scheme. No offence in last 12 months and VAT returns must be up
to date. And leave the scheme if VAT inclusive turnover including exempt supplies
exceeds £230,000.
Flat rate % is applies to gross total turnover (inclusive of Zero rated and exempt
supplies) with no input tax recovered. % will be given.
Can be used with annual accounting scheme.
Not possible to join both flat rate and cash accounting scheme.
SEED FINANCIAL ACADEMY
VAT
- Overseas aspect of VAT – Imports of goods
Use Postponed accounting , where VAT is not paid at import rather trader will
include same amount of Output VAT and claim input VAT while completing a VAT
return.
Include on the same period the goods are imported.
There will be VAT cost for goods for which VAT is not recoverable or business make
exempt supplies.
SEED FINANCIAL ACADEMY
VAT
- Overseas aspect of VAT – Export of goods
Zero rate all exports.
- Overseas aspect of VAT – Services
If Services supplied to overseas customer – Outside the scope of VAT.
If services received from overseas – Reverse charge procedure , Claim input and
pay Output
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