VAT Bookkeeping
Is your business VAT-registered? Value Added Tax (VAT) is a tax charged on most goods and services provided by registered businesses within the UK and can often be a complicated tax to navigate. All businesses must register for VAT if your taxable supplies for the last 12 months exceed £90,000 (from April 1st, 2024), although businesses who don’t reach the threshold are also able to register. Unfortunately, VAT can be unforgiving, with HMRC having stringent penalties for breaches of the legislation.
At Fiander Tovell, we are well versed in all areas of VAT reporting to keep your business on the straight and narrow. We’re always on hand to help, as we know just how tricky VAT can be – particularly for smaller businesses. So, we’ve highlighted some key areas you need to consider to make sure your business stays compliant with UK VAT regulations.
Administration and Record Keeping
Making Tax Digital (MTD) requires all VAT-registered businesses to keep digital records and submit returns using MTD-compatible software, with limited exemptions.
Once registered for VAT, you must file quarterly returns online. These returns need to include the output tax on sales and the deductible input tax on expenditures. The submission deadline is within one month and seven days from the end of the reporting period, and electronic payment is mandatory.
Maintaining thorough and up-to-date records is crucial for VAT compliance. This involves keeping detailed records of your supplies, purchases, and expenses, along with a VAT account summarising the output and input tax. These records must be kept for six years and should be maintained in software that meets HMRC requirements, as HMRC does not provide free software.
In summary, adhering to filing deadlines, maintaining accurate records, and using compliant software are each essential practices for VAT-registered businesses to ensure your compliant and manage VAT obligations efficiently.
This is one of the many reasons businesses look to outsource their bookkeeping to us. We help businesses maintain all crucial records to ensure you meet HMRC requirements. Our systems will keep your business compliant leaving you to focus on core business activities.
Special Schemes
There are special schemes available to simplify VAT accounting. For example:
- The Flat Rate Scheme allows smaller businesses with annual taxable turnover below £150,000 to pay VAT as a percentage of their total business income, reducing record-keeping requirements.
- Retail Schemes are tailored for retailers to ease the impracticalities of maintaining extensive records.
Inspection and Penalties
HMRC may conduct control visits to ensure VAT rules are being applied correctly and that returns and records are properly maintained. You should not assume that the absence of errors during a visit means they are fully compliant. HMRC has wide powers to penalise your business for late registration, errors in returns, and other breaches of VAT regulations.
Not to worry though, with our systems, we’ll make sure your business hands in all documents on time with full assistance. If any issues arise, we’ll help you negotiate with HMRC to reach a settlement to keep your business growing.
How we can help
Ensuring VAT compliance is essential, and outsourcing your bookkeeping to specialists is a smart move. At Fiander Tovell we specialise in bookkeeping and can assist you in several ways, from tailoring your accounting systems to gathering VAT information accurately and quickly, to ensuring your business is VAT-efficient. We also provide assistance with VAT return completion and negotiate with HMRC in case of disputes. Our team can advise on suitable schemes and help you comply with the MTD for VAT regime.
For a more detailed VAT Guide, please visit here.
By outsourcing your bookkeeping to Fiander Tovell, you can focus on running your business while we handle the complexities of VAT compliance. If you would like to discuss any of these points or seek tailored professional advice, please contact our Commercial Client Director, Fabrice Legris, at fabrice.legris@fiandertovell.co.uk