VAT Archives - Page 6 of 8

News,May 2018

VAT Threshold – What is the VAT Threshold?

George02/08/2022VAT

Whether you’re running a small business or a large enterprise in the UK, VAT registration becomes a legal requirement once your turnover exceeds the VAT threshold. This threshold sets the limit at which you must register for VAT with HMRC. If you’re wondering “What is the VAT threshold?”, you’re likely just starting out—and this guide will help you understand everything you need to know. Failing to register for VAT once you’ve exceeded the threshold can lead to penalties and backdated charges. HMRC closely monitors VAT compliance, so it’s essential to understand when you need to register, what the current threshold is, and how to make the process easier by choosing the right VAT accounting scheme. What is the VAT Threshold? As of June 2025, the VAT registration threshold in the UK remains £85,000 and will stay frozen until 31 March 2026. This means if your taxable turnover for the past 12 months has exceeded £85,000, you must register your business for VAT with HMRC. If your turnover is below this level and not expected to exceed it soon, VAT registration is optional. However, some businesses choose to register voluntarily to reclaim VAT on business expenses and boost their credibility with clients. Important: The VAT threshold is based on a rolling 12-month period, not your tax year or calendar year. You must constantly monitor your turnover to ensure compliance. Why is the Threshold Frozen? While the VAT threshold typically changes over time, the government announced a freeze starting in April 2017, which has been extended multiple times to support small businesses. According to the Spring Budget 2024, the £85,000 threshold will remain in place until at least 31 March 2026. You can register for VAT online via the official HMRC portal. Once registered, you’ll receive: Your VAT registration number The effective date of registration Instructions for submitting your first VAT return and payment Responsibilities After VAT Registration Once your business is VAT-registered, you must comply with the following requirements: Charge VAT on all taxable goods and services Submit VAT returns to HMRC, usually every quarter Pay any VAT due to HMRC Maintain accurate VAT records and invoices Comply with Making Tax Digital (MTD) rules by keeping digital records and submitting returns via MTD-compatible software Failure to meet these obligations can result in penalties. When Should You Register for VAT? You must register for VAT if either of the following applies: 1. Past Turnover Test: Your VAT-taxable turnover exceeded £85,000 in the last 12 months. You must register within 30 days of the end of the month in which you crossed the threshold.Example: On 15 April, you realise that a £10,000 project completed on 5 April pushed your turnover for the previous 12 months to £90,000. You must register by 31 May. 2. Future Turnover Test: You expect your VAT-taxable turnover to exceed £85,000 in the next 30 days alone. You must register immediately.Example: On 1 August, you sign a contract for £90,000 to be delivered within the month. You must register by 1 August. Voluntary VAT Registration Even if your turnover is below £85,000, you may choose to register voluntarily. This can offer several advantages: Reclaim VAT on purchases and expenses Enhance credibility with suppliers and clients Prepare your business for growth Meet client requirements (e.g. B2B contracts) However, you’ll also have to comply with VAT obligations like charging VAT and submitting returns. Speak to an accountant to decide if voluntary registration suits your business. VAT Accounting Schemes HMRC offers several VAT accounting schemes to simplify the process of calculating and paying VAT: Flat Rate Scheme Pay a fixed percentage of turnover as VAT Available for businesses with turnover up to £150,000 (excluding VAT) Cash Accounting Scheme Pay VAT when you receive payments (not when you invoice) Eligibility up to £1.35 million turnover Annual Accounting Scheme Submit one VAT return per year, with advance payments Available for businesses with turnover up to £1.35 million These schemes can help improve cash flow and reduce admin burden—your accountant can help you choose the most suitable one. Making Tax Digital (MTD) for VAT All VAT-registered businesses, regardless of turnover, must now comply with Making Tax Digital. This means you must: Use HMRC-approved MTD software to keep VAT records Submit VAT returns digitally Maintain digital links between accounting records MTD is mandatory unless you have received a formal exemption from HMRC. The Bottom Line Understanding and staying compliant with VAT regulations is essential for any UK business. With the VAT threshold currently set at £85,000 until at least March 2026, it’s your responsibility to register on time and meet all legal obligations. Failing to register after passing the threshold can result in penalties, interest charges, and backdated VAT—seriously impacting your business. Whether you’re just starting or your business is growing fast, keeping on top of VAT requirements is critical. Our team of professional members loves to hear your business problems. Call us on 02086868876 or email us today. We will come up with fine solutions. Disclaimer: The information about what is the VAT threshold provided in this blog includes text and graphics that are general. This does not intend to disregard any of the professional advice.

How to Prepare your Business for the VAT Domestic Reverse Charge?

George01/08/2022VAT

If you are associated with the industry of construction, you must be the individual who keeps looking for the new and updated way of accounting for VAT. If you are wondering and searching even now, we have got you covered with the new method of accounting for VAT. VAT domestic reverse charge is known to be a new procedure. You have just found a solution to your accounting problems if you are running a business that is affected too. In today’s guide, you will get help with preparing our business for the VAT domestic reverse charge. It refers to a measure that is designed for ensuring anti-fraud purposes. This will help to avoid criminal attacks on the VAT system in the UK. This often happens through the means of sophisticated fraud there. You will gather relevant information about how this procedure applies to some specified services and products. You can seek help from the expert and experienced chartered accountants at CruseBurke and manage your VAT reverse charge invoice accurately. Contact us now! What is VAT Domestic Reverse Charge? The VAT Domestic Reverse Charge is a fraud-prevention measure that shifts the responsibility of paying VAT from the supplier (subcontractor) to the customer (contractor). It applies to most construction services reported under the CIS (Construction Industry Scheme) and is only relevant for B2B transactions between VAT-registered businesses in the UK. The DRC applies to: Standard and reduced-rate VAT services Labour and materials (if supplied together) Most services subject to CIS It does not apply to: Services provided to end users (e.g. landlords, developers) Zero-rated construction services Supplies outside the scope of CIS Employment businesses supplying labour 1- Make your Staff Well Aware of VAT Domestic Reverse Charge It is one of your major responsibilities that the staff you have hired for VAT accounting must have good awareness about VAT reverse charge as well as the method to function it practically. In the case you happen to be a contractor, it is your main job to proactively contact the VAT-registered subcontractors. This will ensure that your subcontractors are also well aware of the updated information and you will not receive any invoices with VAT charges in an old way. On the other hand in the case you happen to be a subcontractor yourself, it is your responsibility to get in touch with your contractors to discuss new rules and policies related to VAT domestic reverse charge. Moreover, the word domestic is used to make the discussion clear. This will ensure that you do not get confused and mix this information with any other reverse charge. We are focused on specifically domestic reverse charges and the relevant information that is necessary to understand in its reference. 2- Focus On Your Cashflow It is important to consider a serious analysis if any chances can affect your cash flow in the process. In the case of subcontractors, there are high chances for cash flow to be affected. This is because when you happen to be a subcontractor, you are not getting any VAT payments from the consumers. On the other hand, in the cases where you are acting the role of a contractor, You can expect to enjoy the short-term benefits of cash flow. The reason behind the short-term cash flow benefits is that you are not liable to pay any amount of money as VAT to your subcontractors. Moreover, it is vital to keep in mind that you are still required to account for VAT as well as your VAT accounting. You can even contact your accountant to seek help during the process to avoid mistakes that can cause trouble in the future. 3. Identify If You’re an End User or Intermediary Supplier The reverse charge does not apply if you’re the end user of the construction service — for example, a landlord, property developer, or tenant. You must: Notify your subcontractor in writing that you are an end user or intermediary. Ensure this declaration is made before the invoice is issued. If you fail to do this, the subcontractor is required to apply the reverse charge, which could lead to non-compliance penalties. 4- Use an Updated Accounting Software If your business is taking advantage of the accounting software, you will have to ensure that it is an updated version that will help you to deal with the VAT domestic reverse charge. Let’s take an example where you are using the desktop software, you can ask your supplier to provide you with the manual update if it is available for your benefit. However, it is recommended to use software that sets you up with the updated version and features of accounting software. This will help to deal with DRC. Xero is one such example that can help you with the updated features and go about it. 5. Check Invoice Format and Filing Reverse charge invoices must: Clearly state that the reverse charge rules apply Exclude VAT from the total amount payable Include the correct VAT rate, even if not charged You must still record the VAT in your books even though no VAT is physically paid or received. Contractors will account for both output and input VAT on their VAT return. The Bottom Line Now that you have gathered a fair amount of information about VAT domestic reverse charge, we can bring the discussion toward wrapping up finally. To prepare your business for the VAT reverse charge is important to ensure the positive growth of the finances as well as to avoid any future troubles in case the matter is mishandled. As a business owner, you must ensure that you give the required training and awareness to your staff members who are responsible for this purpose and involved in the process. Moreover, you should keep a focus on the reasons that can affect your cash flow negatively. Also, using the updated version of accounting software to work efficiently is an integral part. We hope these few minutes of reading will help you to develop …

VAT on Shipping Costs: A Basic Guide

George29/07/2022VAT

It is trending among people these days to get food delivered at home. Due to this, the high street business is super busy making a profitable set of rules. Services like digital subscriptions and food delivery are observing a surge for sure. If you are associated with e-commerce and you are now taking an interest to invest in being virtual. There must be several questions that you might wonder about and one of them is about the charges of delivery. As you desire to assure about VAT on shipping. This is challenging especially for the SMEs in the UK. Certain rules belonging to businesses are there and this may vary as well. The choice of your delivery method matters to an extent that you opt for the delivery of your products. You should also consider the facts about the following listed points: Cost of postage VAT on delivery charges Purchasing of postage In the case, you are wondering about similar points, we have got you covered here as we will talk about VAT on shipping, the exemptions and set of rules, delivery charges and what is HMRC’s take on this. We begin the discussion with how much VAT is allowed to charge on the delivery charges. Speak to our young and clever team members to get your queries about VAT on shipping answered swiftly. Give us a call on 02086868876 to discuss your concerns. VAT On Shipping – Consider Salient Features You are advised to consider the tax rule of the UK seriously when you are carrying out your business. The salient feature that you should know include the following listed and explained points: 1- The Delivery Service – Your Choice: It depends on the type of delivery service that you aim to use for sending your products, which will determine the VAT you will pay on the postage cost. If you do not pay VAT, this is obvious that you can not even reclaim it. There is no point. The businesses that are using the couriers and other delivery services will be charged VAT on delivery charges. 2- Delivered Good – What is the Item? If you want to know about the VAT on your delivery charges, you will have to consider what item is there in the delivery and how is it treated. Is it a delivered good? For a better understanding, we will take an example of a business that believes to charge for the goods as well as the delivery. VAT will be charged on the total amount in such a case. This means the amount that you get after adding the delivery charges and the price of the product. Now in the other case, a business that aims to charge for the goods delivered but there is no postage cost, there will not be any VAT factor involved. This means VAT will not be charged. Can I Charge VAT on the Delivery Charges of My Products when it is zero-rated? Generally, the answer to this very query is a no. The treatment of VAT depends on the supply of products normally. We will suppose a business that aims to make products like clothes for children and shoes. Now, this is not subject to VAT. There will not be any VAT factor involved in the delivery charges. Other businesses that are dealing in products like helmets, newspapers, and books will follow the same set of rules regarding the involvement of VAT. You must be wondering if you can claim the VAT that you charged on the costs of postage. The good news is yes, you are allowed to claim VAT that is charged on the cost of postage. There is a condition that the postage services should be purchased by your business. This will make you eligible. VAT Rates for Shipping Costs The VAT payable on shipping costs will be determined by the products you are sending. It means that the cost of VAT for shipping varies depending on the goods type being shipped. Currently, there are three VAT rates for various goods: zero-rated VAT (0%), reduced rate VAT (5%), and standard VAT (20%). So, when you send anything, charge the applicable VAT. If you are unsure if VAT applies to an item, you may check the HMRC website or consult a tax specialist. As a general rule, most goods and services should be charged at a regular rate of 20% VAT, with a reduced rate of 5% VAT for children’s products. Here’s the rule: Standard rate VAT (20%) must be paid for the delivery of products that are subject to standard rate VAT. Any item with a lower rate must have its shipping expenses charged at a reduced rate VAT (5%). If you’re sending VAT-exempt products, you must charge zero percent VAT on the delivery expenses. HMRC Set of Rules about VAT – Reflect your Business The set of rules about VAT issues by HMRC is known to be quite complicated. The most complicated factor is the dependence of VAT charges on the goods. Also, the factors like who is involved in delivery, and if it is delivered well are salient features yet increase the complexity of this matter. There is also a consideration of from which country are you sending the products or which country s receiving the products. When it comes to the VAT charges, this really matters a lot. What makes it more complex is that the set of rules must be reflected by the IT system of every business. Every step is considered and checked. All the relevant calculations must be accurate. The calculation includes what amount you are charging to your customers, if VAT is included or not, and if you will be able to claim VAT. In case the laws of the tax change in the country, the level of complexity increase again. The Bottom Line Now that you have gathered a fair amount of information about VAT on shipping, we can say that understanding VAT on delivery …

Voluntary VAT Registration for Small Businesses!

George13/07/2022Tax Issues , VAT

If you are running a small business that is still less than £85k per annum but you decide on voluntary VAT registration. This decision does not make sense in all circumstances and situations. Other than that suitable circumstances to go with this decision. People associated with carrying out a small business often question about voluntarily registering for VAT is a fair decision for the betterment of business or not? The answer is yes it is worth questioning about registering VAT voluntarily as the question will lead to further business benefits in future. This decision will make you charge the administration well as the customers who are interested in buying your offered products or services. Nowadays it is required to connect with HMRC MTD (Making Tax Digital) if you aim to register voluntarily. It has been observed that the tax collector on behalf of HMRC does not sound like a wise idea and appeals to most people. The process is not as simple as it might sound, as there is a restriction of certain circumstances as to when voluntarily registration can be beneficial for the business. We have covered the process of VAT registration, who needs to register, and what are the business responsibilities involved in this process. Reach out to our smart and clever-minded guys to get your VAT queries answered quickly. We will help to let you decide about VAT registration with a clear mind. Who Needs to Voluntary Register VAT? It becomes a compulsion for your business to register for VAT when your business crosses the limit of the VAT threshold. The required figure in this regard is £85,000 currently. When you foresee your VAT taxable turnover will cross the required limit of your threshold within 30 days, you should immediately do the needful. In the other case, if you are not expecting your taxable turnover to cross your business threshold any time soon, there is no requirement for you to register for VAT. However, some small businesses still do it voluntarily. The Process of Voluntary VAT Registration Even in the case of voluntary registration for VAT, the process will remain just the same as the businesses do when they are required to begin the process. The businesses no matter if they are VAT groups or partnerships, come under one registration number. Online registration for VAT is considered the most reliable method. All businesses are allowed to register for VAT online. If you finally decide to register VAT online, you will be in need of creating an online VAT account. This will be later used to maintain reporting of your VAT. Moreover, in the case of the VAT exceptions, you will have to apply for the VAT exceptions. In such a case you will apply by post. You can register the business divisions, or join the late rate scheme of agriculture. This will be done for separate VAT numbers. The Business Responsibilities of Voluntary VAT Registration If you are running a small business and have decided to voluntary register for VAT even though it is not a business requirement according to your threshold as yet. Your duties and responsibilities will remain just the same as the businesses that are required to register for VAT. This brings in the following listed requirements: You are required to maintain the records as well as the account for your VAT. You need to submit your VAT returns. You will be asked by HMRC to pay any VAT. You can have a right to charge VAT to your customers and administration, however, focus on charging the right amount of VAT. Voluntary VAT Registration and MTD Obligations When you get your business registered for VAT, you will have to consider MTD. This is to ensure the initiative of HMRC to make the VAT returns digitise. Under the requirement of MTD, the businesses will keep an online record of VAT. They will also use the online making tax digital software to report the VAT. Moreover, making tax digital is not mandatory for every business that is VAT registered in the current scenario. In case your taxable turnover is more than your business threshold, only then you will be required to adhere to the rules and regulations of MTD. Some complex businesses are still exempted from this obligation. In case your business threshold is less than £85,000, you are not required for VAT registration and for making tax digital. If the situation changes in future, so will the obligations. In simple put, you can say that mostly you will have to register for making tax digital if you are required to register for VAT. And if you have chosen this option voluntarily, you can choose whether you will opt for making tax digital or not. The Bottom Line We can bring the discussion of Voluntary VAT registration toward wrapping up as you have gathered a fair amount of information by now. In conclusion, we can sum up by saying that registering for VAT voluntarily can prove to be a beneficial option for several small businesses. However, there are still businesses that choose to remain unregistered unless they are required to get their business registered for VAT. To make a fair decision about whether you want to get your business registered for VAT voluntarily or not, you must weigh up the circumstances of your business and its financial health. Furthermore, you should consider the MTD obligations and other responsibilities that come when you are a VAT-registered business. We hope the gathered information after reading this blog will guide you to make the right business choice. Our team of professional members loves to hear out your business problems and find out the possible and suitable solutions quickly. Call us on 02086868876 or email us today. We will come up with fine solutions. Disclaimer: The information about Voluntary VAT registration provided in this blog includes text and graphics that are general. This does not intend to disregard any of the professional …

How to Choose the Right VAT Scheme for Your Small Business?

George07/07/2022Tax Issues , VAT

Whether you carry out your business as a limited company or as a sole trader. VAT registration becomes mandatory if your business’s taxable turnover exceeds £90,000 in a 12-month period. However, many small business owners choose to register voluntarily before reaching this threshold. Nowadays several people choose to voluntarily register for VAT even in a scenario where they don’t see themselves reaching the taxable turnover threshold anytime soon. It is considered to be a strong strategic business decision. In case you are a beginner who is getting registered for VAT for the very first time, you need to ensure that you have good research about how to choose the right VAT scheme for your business. In this guide, we have gathered the schemes of VAT that are most common among small business owners. This will help you to pick a suitable option for your business. Reach out to one of our professionals to learn what is the best way to choose the right VAT scheme for your business. We will love to offer instant help! How to Choose the Right VAT Scheme for your Small Business You are allowed to choose the right scheme of VAT when you initiate the process; it’s a flexible option open for everyone to choose as per their understanding. As of April 2024, the VAT registration threshold is £90,000, and the deregistration threshold is £88,000. Moreover, it is important to choose the right option wisely as this will further help you to identify the ways to make calculations about your VAT returns as well as how frequently you are required to file with HMRC. If you successfully pick the right option of VAT scheme for your business, you will have the benefit of controlling your cash flow in a better way. The most common VAT scenes among the owners of small business owners are listed and explained below for your further understanding. 1- VAT Flat Rate Scheme If you choose the VAT flat rate scheme, you will find the appropriate VAT rate to charge for the services and products that your business is offering. Further, when the stage comes toward the calculation of VAT to identify how much you owe to HMRC in this regard, under the Flat Rate Scheme, you pay a fixed VAT percentage based on your business type, rather than calculating VAT on individual sales and purchases.. This fixed percentage is according to the industry you belong to, and HMRC has fixed it. Your final year’s total taxable turnover is required. The good news is that you will discount on this flat rate in case you are in the first year of VAT registration. Moreover, there is an opportunity to save for small businesses in case they choose the VAT flat rate scheme because these fixed rates are lower than the rates of the standard VAT rate. 2- VAT Annual Accounting Scheme VAT annual accounting scheme refers to the allowance of filing for VAT returns only a single time within the time duration of a year, unlike the standard VAT scheme or the cash accounting VAT scheme. Form VAT600 AA is required to be used in case you aim to apply for a VAT annual accounting scheme. There is a possibility of choosing a combination of schemes, like a VAT annual accounting scheme with a flat rate scheme. Moreover, if you do not submit the VAT returns frequently in a year, you are still required to clear VAT payments regularly with HMRC. In case you are in the first year of VAT registration, the amount will be decided through an estimate. However, if you are not in the first year, the amount will be decided according to the VAT return bill of the previous year. This scheme is ideal for businesses with steady cash flow and turnover under £1.35 million. You make advance payments towards your VAT bill and submit one VAT return per year. 3- Cash Accounting VAT Scheme This cash accounting VAT scheme is not considered different from the standard VAT scheme. It is just an alternative method to calculate VAT. In case you decide to switch to this alternative method of calculation, there is no requirement to bring this to the attention of HMRC. However, the ability to stay consistent with the chosen method is always suggested. Moreover, if you choose the method of cash accounting VAT scheme to make your calculations, your calculations will be only done when the invoice of sales is paid, as well as the purchase invoices are paid by you. Using this scheme, you only pay VAT when your customers pay you and reclaim VAT on purchases when you pay your suppliers. 4- Standard VAT Scheme People mostly get confused between the terms accrual VAT scheme and standard VAT scheme. However, the accrual VAT scheme refers to the standard scheme, is just a simple explanation for this confusion. The prominent feature is that this is set automatically as a default option in case you are a beginner and getting registered with HMRC for the first time. The method to make calculations is very straightforward in this case. Simply, the VAT sales invoices are deducted from VAT purchase invoices. This scheme allows a factor of flexibility by having good control over your cash flow. In case you find out that your purchases are less than your sales, some of our sales invoices can be staggered and be part of the following quarter. The Bottom Line Now that you have gathered a fair amount of information about ‘choose the right VAT scheme’, we can bring the discussion toward wrapping up. We can sum up by saying that we have listed only the popular VAT schemes, considering your small business. However, there are more specialist VAT schemes with other specifications for the relevant industries. If you wish to learn more about the VAT schemes to be more clear to complete your VAT returns, you can simply opt for further professional help to choose the right VAT scheme …

Charging VAT on Expenses: Disbursements vs. Recharges

George19/05/2022Finance , Marketing , Personal Tax , VAT

We are associated with the business world to carry out services for our customers. Whenever we offer a service to a client, we usually incur some form of cost. Whether you need to travel to meet a client, purchase a specific tool, or use paid software to deliver your service, it’s important to understand how these costs are treated when it comes to VAT—particularly in relation to recharged expenses and disbursements. This becomes even more crucial if you’re VAT registered. You must know how to treat these expenses on your invoices and understand when VAT should be charged—and when it shouldn’t. Even experienced business owners can find this distinction confusing. This article will help you understand the differences between recharged expenses and disbursements and explain how to handle VAT correctly in each case. How to Define Disbursement and Rechargeable Expenses? The term disbursement refers to the buying of the products or services that you intend your customers to receive from you and get the benefits of its usage. The demand depends on the requirement of the client, may it be business-related reading material or website hosting packages. On the other hand, rechargeable expenses are defined as the purchase of something that you need to fulfil the demands of your customers to work. There is no chance that you treat this as a disbursement, this is the rechargeable expense. Examples of travel costs that are planned for business causes as well as the amount of money you spent while you were posting some documents to your customers. Need help with VAT Registration? Understanding VAT rules can be tricky — but registering for VAT doesn’t have to be. Let our experts handle it for you. Register for VAT with CruseBurke. Learn To Invoice Your Client For Rechargeable Expenses You have to deal with the expense while you are carrying out work and getting your regular duties done as a contractor for your client, you do invoice your client for such expenses. The most used and simple suggestion is that you add VAT on the expenses regardless of the fact that you might have paid VAT or not. Invoice Your Client For VAT on Disbursement As discussed earlier while you are making a purchase of services and products as per the requirement of your customers, you tend to leave VAT calculation from these payments. Technically this depicts that it is the customer who has purchased and gotten the products or services. Your position is as a go in between all the processes. These kinds of transactions are considered disbursements with the purpose of VAT. Moreover, there are a few certain conditions that must be met to ensure that the payment can be treated as a disbursement. See the following listed conditions: The amount of money spent while making the purchase is a part of the billing that you will invoice your customer. The cost of products and services purchased is an additional amount mentioned in the billing for your customer. This is for the reason of carrying out the work all by yourself. The amount spent on the purchase of goods and services is clearly mentioned with relevant details on the bill. A separate section makes it outlined even more clearly. The customer should know that the products or services he has received are not directly from you but are outsourced from a supplier. The client has taken the responsibility to make the payment for the required purchase. The customer has received the product without a hassle and enjoys the benefit of using it. You played the role of an agent and your client had a piece of knowledge about this. You got the permission of your customer before making the payment. Regardless of what size of business you own, we are just the right choice to deal with your queries. Call us on 02086868876 or email us today. Can You Claim Back VAT? You can only reclaim VAT if you are the buyer and the invoice is in your business’s name. If it’s a disbursement, you cannot reclaim VAT because you were not the buyer. If it’s a rechargeable expense and VAT was charged to you, then you can reclaim the VAT (assuming the invoice is in your name and supports input VAT deduction). Wrapping Up The discussion of VAT on the disbursement can finally be wrapped up since you have gathered all you need to know for a basic understanding. You may have purchased the products and services on someone else’s behalf but if it is from a supplier who is VAT registered, this makes you ineligible to claim back VAT. The reason is that such transactions are considered as a disbursement by you for VAT purposes. Get the most benefit of the right decision-making and ensure your business growth. If you seek professional help to learn further in this regard, this is always a great idea to add to your basic knowledge. We hope these few minutes of reading will help you to make a permanent mark in the market and secure the future of your business. Disclaimer: The information about VAT on Disbursements provided in this article is general in nature. It does not intend to disregard any professional advice.

Reclaim VAT On Business Expenses

George06/01/2022Taxation , VAT

VAT-registered businesses need to charge VAT on their sales and can reclaim the VAT they pay for business expenses. However, reclaiming VAT on expenses isn’t as straightforward as it seems—several complex rules apply. With these complexities, reclaiming VAT on expenses can be trouble. In this quick guide, you’ll learn when you can and can’t reclaim VAT, how you can reclaim VAT, reclaiming VAT for business vehicles, fuel, and staff travel and can you claim back VAT on purchases made before registration. Let’s explore! Getting professional advice from a VAT accountant is preferable to get your VAT refunds and to be saved from hefty tax implications that can wipe out your profit. So get in touch with our experts to be on the safe side. When You Can and Can’t Reclaim VAT? It is an understood fact that only VAT registered businesses can reclaim VAT on goods and services. If you have paid VAT on the goods and services purchased by the business (input tax), you can make a reclaim. Here are the circumstances under which you can reclaim VAT: when a customer leaves you with a bad debt you’ve bought goods or services for your business Things like stock, computers, phones, and stationery are considered business expenses include. You can’t claim VAT on client entertainment. Here, you need to keep a record of all your invoices and receipts to provide as evidence. However, you can’t make a reclaim on goods and services that: are exempt supplies or relate to it are for non-business or personal use are for client entertaining are for car purchases (exceptions) You can’t claim for input VAT if you operate a VAT flat rate scheme unless it is related to Capex (capital expenditure) of more than £2,000 (including VAT). So, as a result, this scheme works better for businesses having fewer expenses (on which VAT can be claimed) compared to their turnover. However, it is not good for those who purchase a lot of standard-rated items. How You Can Reclaim VAT? The VAT you claim back will depend upon the input VAT you have paid at the time of submitting your VAT return. You need to include the relevant figure in Box 4 of the tax return. HMRC will subtract this from the VAT charged by you in the relevant period and you’ll be required to pay the difference. HMRC may repay the amount to VAT you collected if you paid more than you have collected. Want to get your VAT concerns sorted! We’ll take care of everything. Get in touch with our VAT experts! Reclaiming VAT on Business Vehicle and Fuel You can’t claim input VAT on cars, but you can claim it on some vehicles provided some conditions are met. If the input tax on the vehicles is reclaimed by a business, then VAT must be levied at the time of the vehicle’s sale. Read more about Reclaiming VAT on Business Vehicle Reclaiming VAT on Staff Travel VAT can be reclaimed on employee travel expenses (like fuel, meals and hotels). However, you cannot claim back VAT if you pay your employees for flat-rate expenses ( equipment like tools, uniforms and stationery). Want to register for VAT? Fill out this form and leave the rest to us! Can VAT be Reclaimed on Purchases Before Registration? Generally, you can reclaim VAT for goods purchased up to four years before you are registered for VAT. But for services, it is six months before registration. Here the goods purchased need to be: used for taxable business purposes still, be held by the business or used to manufacture other goods Services -to qualify- must also be utilised for taxable business purposes. These may include legal or accountancy fees. Quick Sum Up Hopefully, this guide help you ou to understand the process of reclaiming VAT on expenses and how you can reclaim it. In addition, you can also reclaim the goods bought back up to 4 years before VAT registration. Bear in mind that VAT can only be reclaimed on the goods and services purchased for business use. So, you need to keep all the invoices and receipts to reclaim VAT on business expenses. CruseBurke offers inclusive VAT services at a reasonable price! Contact our qualified VAT accountants and sort out your VAT issues in no time! Get an instant quote right away! Disclaimer: This blog provides general information on reclaiming VAT on expenses.

Reverse Charge on EU VAT

George20/12/2021Taxation , VAT

When an individual has experience with suppliers to avail their products or services in the EU countries, due to reverse charge the responsibility of recording VAT transactions moves from the supplier to the buyer to avail the products or services. This makes the supplier free from the responsibility of recording VAT registration in the very country where he is making the supply. Moreover, in case the seller has to deal with any local VAT for the products and services supplied by them due to the reverse charge, even that can be easily reclaimed and recovered with the help of EU VAT. In order to make the VAT simple among 27 member states, a reverse charged mechanism was introduced in 1993 when the tax system was of the European Union was reformed as well to ensure the single market. Before we delve into further discussion, we need to have a look at the following points of discussion in this article. This includes the following: Reverse Charge – How Does It Work? Exapmles and Use of Reverse Chaarge The Bottom Line Stuck with your accounts and looking for a helping hand? How about you get our guys on a quick call. We love talking about taxes, payroll management and any opportunities that help you expand your prospects. Call us on 020 8686 8876 or email us today. Reverse Charge – How Does It Work? The moment the reverse charge is actually applied, the declaration is made about the purchase and sale that include input VAT and output VAT by the recipient of the products and the services while doing the VAT return. In this process, the same return is associated with the cancellation of the cash payment of both entries. However, the authorities are of the view that the transaction is still reported to them by some of the special boxes that are in the return for the supply of the products and services made for cross-border purchasers. Do you intend to learn more about the reverse charge? Get in touch with one o our professionals and get instant help now. Examples and Use of Reverse Charge: Here is the discussion of some examples that will explain how to reverse charge is applied among EU members states. This includes the following: The reverse charge is applied when there is a supply of required products or services is made in an EU state to a business that is VAT registered. Some of the services like live events and immovable properties come under the special rule and this depends on the place where the supply is made for any product or service. The reverse charge is also applied when the products or services are being provided to a person or business who is in another EU state Moreover, if the EU business is not VAT registered, it becomes an obligation to get VAT registration completed before the supply is made. In order to get yourself the services outside of Europe. The Bottom Line: Now that you have developed a basic understanding of the reverse charge and the relevant details, we can sum up the discussion by saying that the process in itself is simple with its rules, however, if not followed according to the set of rules it may cause problems for the supply and recording. We hope this article helped to develop a better understanding and ensure the seamless working for your supplies. Our accountants at CruseBurke are qualified and cost-effective! We save your time, money, and stress by handling all your finances and business problems in no time! So, allow us to do this at an affordable package! Disclaimer: This article intends to provide general information based on reverse charge and the relevant details.

A Basic Guide to Become A Successful Sole Trader!

George03/12/2021Sole Proprietorship , Sole Trader , VAT

A sole trader is a person who is self-employed and owns a business. According to research, about 60% of UK businesses are sole traders. This business structure is popular because of the simple ways to get into trading as well as the paperwork is minimal. However, sole trader advice by professionals will always be helpful before you plan to begin. By now, you must be wondering that if it is the right option for you to opt for sole trading. Maybe you are already into working as a sole trader but look for new ways that can push your business toward success. This article is designed to provide the best and easiest tips to make your trading history a success story. Before we delve deep into the discussion further, we need to have a look at the focused points of discussion in this article. This includes the following: Sole Trader Advice to Be Successful Dedicated Bank Account Registration Process VAT and Tax Focused Skills for Business Work Place The Bottom Line Speak to one of our qualified accountants? Give us a call on 020 8686 8876 or request a callback. Sole Trader Advice to Be Successful: To be ensured that you want to be a sole trader, it is important that you gather enough information based on the drawbacks and advantages of becoming the one. The advantages that come with this structure cannot be denied. Like: Business control all by yourself Hire people that suits you and the work needs with your own choice. The greater degree of privacy factor about your business Pay tax on your benefits and keep the rest The business can be closed in an easy way than is the case in a limited company. You only have to clear your debts, gather the money and notify HMRC about the business closure. Moreover, there are several drawbacks that are needed to be considered before taking the plunge in sole trading, this will further help to make the right decision. The freedom and independence that come with working as a sole trader are the prominent factors to the tendency increasing for this. Below are certain tips discussed to be successful. Dedicated Bank Account: Many people seek to have a dedicated account to fulfil the needs of the business finances. Maintaining a separate account for business finances is a better idea to be clear about your business and money. This will allow you to have a clear view of your income and expenses. Registration Process: It is very important to get yourself registered as a self-employed person with HMRC once you start trading. This will help to declare the status. The year in which you started working as a sole trader, you can register by 5th October after the tax year has ended. Late registration might cause penalities. VAT and Tax: As HMRC explains, a sole trader has to pay self-assessment tax returns every year and for that, it is a must to keep a track of your income in a fair manner. This does not matter if the business has yet started to make profits or not. On a tax return, the since and business expenses are declared as well. Moreover, you have to register for VAT if your annual turnover goes above £90,000. Focused Skills for Business: In the process of becoming a business owner, things you are dealing with at the same moment become overwhelming for you. The development of your business skills is equally important. The business owner must take part in the conferences, courses and event shows to be updated. By having a command of professional skills, you can do the following: Find new clients easily Be updated about the market demands and changes Process different skills as a professional Work Place: The dream of becoming your own boss and going for self-employment is to seek the balance in professional work life. It comes with several advantages but the factor of being lonely is when you don’t have enough company in the surroundings for the interaction. Working from home means there are more chances of being distracted as well. The factor of productivity goes low because of the house chores interruption. It is here suggested that the workplace from your home should be a well-managed room or side that can easily separate your mind from your personal life. Some other benefits that choosing a better workplace will bring include the following: Discipline Workday and dress properly before you enter into your workplace Enter in professional work mode Choose your suitable working hours Enjoy your lunch breaks The Bottom Line: Now that you have developed a better understanding of the Sole Trader Advice, we can sum up the discussion by saying that becoming a sole trader comes with prominent and undeniable advantages as discussed in the article but being self-disciplined will help you achieve success as a sole trader. We hope this article helped to develop a better understanding. Therefore, look no further other than CruseBurke. We offer comprehensive accounting and taxation services to Sole Traders only at £25 per month. You may create your own unique package here. Disclaimer: This article intends to provide general information based on Sole Trader Advice to be successful and relevant details.

What are the Benefits of Being VAT Registered?

George23/11/2021Tax Issues , Taxation , VAT

When setting up a new business, some people may think that it is necessarily important to register for Value Added Tax (VAT). But, you need to know that it is not mandatory to register, provided that your VAT taxable turnover is over £85,000 (VAT threshold). However, even if your annual turnover is below the threshold, you can still register for it voluntarily as it comes with a lot of advantages. There are a lot of benefits of being VAT registered. As it helps your new or emerging business to appear more professional and stable in the business world. So before we delve into the benefits of being VAT registered, let’s see what is VAT? Want to register for VAT? We’ll take care of everything from scratch to acquire your VAT number. So, fill out this form and leave the rest on us! What is VAT? VAT, Value Added Tax is a consumption tax on products and services collected by businesses on HMRC’s behalf. All businesses having a VAT taxable turnover of over £85,000 need to register for it. For businesses that are VAT registered, VAT is charged on the majority of all goods and services they provide. In addition, this tax is also charged on the goods and services imported from EU or non-EU countries. This tax is added to the sale price of things sold to commercial and non-commercial businesses. Businesses that are VAT registered can claim back the VAT paid to their suppliers or other businesses. Now let’s see the benefits of being VAT registered! Benefits of Being VAT Registered This question is often asked by many new businesses that why there is a need to register for it if their turnover is below the VAT threshold. There are many advantages of doing so as it has a lasting impact on the financial health of your business. There are a lot of benefits of being VAT registered: Improve Your Business’s Credibility To appear an established business and to improve your perception, you should consider registering for VAT voluntarily. As many businesses know that £85,000 is the VAT registration threshold. If your business is not VAT registered, your competitors will know that its turnover is lower than the VAT threshold. So, it is a great way to improve business credibility and to appear a large business in the eyes of your clients and competitors. Access to VAT Registration Number By registering for VAT, you can display your VAT registration number on all the business documents, and its website to show the public that you are a VAT registered business. It improves your credibility and provides others with a trustworthy image of your business. Increased Cash Flow One of the other benefits of VAT registration is better cash flow. Once your business is VAT registered, you can claim back your VAT costs. The higher your set-up costs, the more you can claim them back. All the costs you put in on your business like getting stocks, investing in technology, or getting professional services, so getting these costs back can be a life-saving step. Claiming VAT Refunds Your business will be able to reclaim the VAT that you paid for. If your input tax (VAT paid) exceeds the output tax (the VAT you charged), you can claim the difference from HMRC. When you invest in buying machinery, plant or equipment, you can reclaim a large amount of VAT. While submitting your VAT return, you may find that you can reclaim a lot from the HMRC. Need professional advice from a VAT accountant? Get in touch with our experts today! Reclaiming VAT from the Past Once you are registered for VAT, you can get the advantage to claim VAT for the last 4 years on the things you still use. To do it, you need to be VAT registered for a considerable time and keep all the records, invoices and receipts of the past 4 years. More Work Opportunities Many investors, buyers, lenders, and clients prefer to work with VAT registered business. So by registering, you will open doors to more business opportunities to widen your business spectrum. Quick Sum Up Now that you are well aware of the benefits of being VAT registered, you can improve the position of your business by registering for VAT. You can register for it directly on HMRC’s website or by filling out the VAT1 form. However, the process can be daunting, therefore allow us to register your business for VAT to avoid the hassle. Register For VAT today!!! CruseBurke offers inclusive VAT services at a reasonable price! Contact our qualified VAT accountants and sort out your VAT issues in no time! Get an instant quote right away! Disclaimer: This blog provides general information on the benefits of being VAT registered.