ADDED TAX (VAT)
added tax (VAT) is a consumer tax. It is collected by VAT
registered traders on their supplies of goods and or services.
Each trader pays VAT on goods and services acquired for the
business and charges VAT on goods and services supplied by
the business. The difference between the VAT charged by you
and the VAT you were charged must be paid to the HM Revenue
& Customs. If the amount of VAT paid by you exceeds the
VAT charged by you the H M Revenue & Customs will repay
you the excess. This ensures that VAT is paid by the ultimate
customer and not by the business.
must register for VAT?
must register for VAT if you are a taxable person and your
annual turnover has exceeded £85,000 in ANY twelve month
period or is likely to exceed this amount in the following
should I register for VAT?
As soon as you have reached the limits set
above you must register. You can, if you wish, register any time
before this but this is voluntary.
do I register for VAT?
register for VAT you can complete the on line registration.
You can only register if you have commenced business or you
are about to in which case you must show evidence of your
rate is VAT charged at?
standard rate of VAT is 20%. This applies to all goods and
services that are not exempt or liable at the zero or reduced
Reduced and zero rated goods applies to certain goods such as
fresh foods, domestic fuel,certain books....etc.
When must I account for and pay VAT?
you are registered the H M Revenue & Customs will send
you a notice to complete a Vat Return form on line, every
three months. You must complete this form giving details of:
- VAT charged by you for the period
- VAT paid by you for the period
- VAT payable or repayable for the period
- Net value of goods and services supplied
by for the period
- Net value of goods and services acquired
by you for the period
You must submit
the form on line to the H M Revenue & Customs by the end
of the following month of the period end plus seven days,
e.g. the form for the period ended 31 March must be received
by the HM Revenue & Customs by 7th May. Any Vat payable
must be paid electronically by the same date, however if you
arrange for the payment to be collected by the HM Revenue
& Customs via direct debit, it would be taken from your
account 3 working days after the 7th, typically on the 10th
unless near a weekend or public holiday.
do I claim a repayment?
the VAT you incurred by you exceeds the VAT charged by you
you will be due a repayment of VAT. Once you have returned
the form as above the repayment will be paid directly into
your bank account via electronic transmission.
I keep special records for VAT?
must keep your books and records in such a way that your VAT
position can be clearly established. This will not generally
involve keeping separate records for VAT purposes.
In addition to having
books of account which are properly written up and balanced
on a regular basis, you must also keep all invoices, bank
statements and all other supporting documentation relevant
to establishing your VAT position. All these records must
be available for inspection by a H M Revenue & Customs
officer. You can expect a visit by an officer at any time.
All records must be kept for at least six years.