Smart, timely, and effective VAT accounting services for UK businesses

To calculate your VAT return, it’s essential to accurately determine the amount of VAT you owe and how much you can reclaim from HMRC for VAT paid on purchased items. You can do this by adding up all of your business and exempt sales, including VAT, and then multiplying that total by your flat rate percentage. If you find this process too tedious, you can always contact the experts at Lyel Accountants for assistance.

The VAT accounting period, generally known as the VAT return period, usually lasts for three months. Most businesses file their VAT returns quarterly. You’re required to file your VAT return and pay any VAT due to HMRC usually one month and seven days after the end of the VAT return period. For example, for a VAT quarter ending on 31 March, the VAT return and payment would be due by 7 May 7. With the introduction of Making Tax Digital (MTD), you’re now required to maintain digital VAT records and use suitable software to submit your returns if your business taxable turnover is above the VAT threshold (£90,000).

VAT, or Value-Added Tax, is a tax on goods and services. It’s added at each step of making and selling things. When you buy something, the price you pay includes VAT, and the company selling the item then pays the government the VAT amount that you paid.

Different things might have different VAT rates, but the idea is that the final buyer pays the tax, while businesses in between just pass it along to the government.

You must keep a record of everything that will have an impact on the amount of VAT that you need to pay. This includes:

• Everything that you buy and sell, even if it is VAT exempt or zero rated.
• Copies of every invoice issued.
• Copies of every invoice you receive.
• Details of any self-billing agreements – these are where a customer prepares the invoice themselves.
• Details of any self-billing suppliers including their VAT number.
• All debit and credit notes that were issued.
• Details of any goods that have left stock but not been paid for.

It is a good idea to also retain all general business records including cheque books, paying-in books/slips, till rolls, bank statements and so on.

You must register for VAT when your taxable turnover reaches £90,000.  This should be:

• When your turnover for the previous 12 months has reached £90,000

Registration is required by the end of the month that your turnover for the previous 12 months has exceeded £90,000.  You have 30 days from the end of the month you exceed the threshold to register.

• You expect your turnover will exceed the £90,000 threshold in the next 30 days;

For example, you take an order for £92,000 on 1 July and payment will be made in one months’ time. As soon as you’re aware of this, you have 30 days in which to register for VAT – so you should register by the end of July.

You can also register for VAT before your turnover reaches the £90,000 threshold.