You’ll usually need to calculate VAT and file a return every three months, but your VAT duties don’t end there. You’ll need to work out how much to charge on your sales, record absolutely everything during the VAT period, and ensure all calculations are accurate. This isn’t always doable for time-poor business owners.
That’s why many growing businesses choose to outsource their services to an accountant specialising in VAT. We do exactly that here at Daniel Wolfson. Contact us today.
Welcome to Daniel Wolfson, VAT accounting specialists
As part of the award-winning DNS accounting group, Daniel Wolfson has near-unlimited capacity in terms of people power, expertise, technology, and other resources to manage virtually every business, finance, or accounting-related task.
But, we will always focus on nurturing client relationships from the start since that is the very basis of our holistic, proactive service model. We truly want every business to succeed: it’s beneficial for us, excellent for you, and fantastic for the UK economy.
At Daniel Wolfson, we offer holistic business advisory services and accounting and tax services. We are also expert VAT accountants. We welcome when our existing clients realise VAT is too complex and time-consuming to manage in-house, and we will always be there to help out. Our VAT team will cover every aspect, from registration to providing ongoing VAT services, keeping your business compliant and you at ease.
If you’re a VAT-weary business owner looking for someone to take the pressure off your shoulders, then look no further. Contact Daniel Wolfson today to find out how our VAT services can give you back more of your valuable time.
What is VAT?
Value Added Tax (VAT) is a tax added to most products and services that VAT-registered businesses sell. Not all businesses need to register for VAT. Some voluntarily register because of the benefits of reclaiming VAT, and for others, VAT registration is mandatory because the business’s taxable turnover exceeds the VAT threshold.
Currently (2024), the UK government has set the standard rate of VAT at 20%, with reduced rates and exemptions applicable to certain goods and services, such as 5% on domestic energy and children’s car seats. Some products, such as children’s clothes and most foodstuffs, are set at zero rate VAT.
How do I know if I need to be VAT registered?
The current threshold for mandatory VAT registration is £90,000 (2024). So, if your business exceeds this threshold within 12 months, or you expect it to in the next 30 days, you’ll need to register for VAT and start charging it on your products and services.
Regardless of taxable turnover, registration is mandatory if all the following are true:
- You’re based outside the UK;
- Your business is based outside the UK;
- You supply any goods or services outside the UK (or expect to in the next 30 days).
Don’t need to register for VAT yet? It is still important to keep an eye on the latest HMRC VAT guidelines, as they can change.
Our qualified and experienced VAT accountants will keep you updated so you’ll be among the first to know if your VAT obligations change. We’ll make sure your business is all set for VAT registration when you hit the threshold and keep you compliant by finding the best VAT scheme and strategy.
What VAT schemes are there?
HMRC created VAT schemes to simplify the VAT process. Depending on the criteria, there are many to choose from, but don’t worry if you get stuck – that’s what we’re here for.
Standard VAT Scheme
This is the conventional way to process VAT. Businesses in the VAT Standard Accounting Scheme are required to submit a VAT return four times a year, make VAT payments, and receive any VAT refunds due to them quarterly.
The VAT that’s either owed or refundable is reckoned by VAT calculations, including VAT due on expenses and the amount of VAT owed from sales. If sales amount to more than costs, you will owe HMRC the difference. Alternatively, if costs are higher than sales, a VAT repayment will be due from HMRC.
Flat Rate VAT scheme
The Flat Rate Scheme allows your business to pay VAT at a fixed percentage of your business’s annual turnover, provided it is under £150,000. This scheme is designed to simplify the VAT process and administration for small businesses.
Flat Rate VAT Example:
With the VAT Flat Rate Scheme, you can calculate how much you owe by multiplying your flat rate percentage by your VAT-inclusive turnover. Therefore, if your turnover is £10,000 and your flat rate is 10%, your flat rate VAT liability will be £1,000.
Note that the Flat Rate scheme is not open to all businesses, such as:
- Those who left the scheme within the past 12 months;
- Those that have committed a VAT offence within the past year (e.g. VAT evasion);
- Businesses that are closely, financially or organisationally associated with another business.
VAT Annual Accounting Scheme
If your annual VAT taxable turnover is £1.35 million or less, you may be eligible for the VAT Annual Accounting Scheme. With this scheme, you’ll only need to complete one VAT return each year instead of four.
Cash Accounting
There is also the VAT Cash Accounting Scheme, which enables you to pay VAT after customers have paid rather than when you invoice them. This helps to keep cash flow balanced, as you know exactly what is coming in and out of your business and when.
VAT Magin Scheme
There is also the VAT Margin Scheme, which might apply to retail or second-hand goods businesses (where VAT is paid on the value added to the goods you sell rather than on the total selling price of each item). This is only one of three possible VAT retail schemes where you calculate the VAT once with each VAT return rather than for each sale you make.
Our VAT services
At Daniel Wolfson, we’re passionate about helping our clients stay on top of their finances while ensuring 100% compliance. We understand the pressure growing businesses face and know that your schedule may be packed, so we offer flexible VAT services that can be fully adapted to suit your specific needs.
Here’s what we can offer with our VAT services:
- Advice on whether to register for VAT
- Identifying the best VAT scheme for your business
- VAT registration with HMRC
- Deregistration as necessary
- Advice on suppliers’ VAT liability
- Preparing, reviewing, and submitting your VAT return and advising you of your VAT liability
- Partial exemption calculations
- Total compliance with Making Tax Digital (MTD), assisted by Daniel Wolfson’s free cloud-based accounting software
- Communicating with HMRC on your behalf and assisting with compliance inspections
- Providing specialist VAT advice (such as international transactions and reverse charges, land, property, and construction, not-for-profit organisations, tax refunds and more)
Calculating your VAT liability
Traditionally, your VAT liability can be calculated by working out the difference between how much VAT you have paid to other businesses and how much you have charged. So, if you’ve charged more VAT than you’ve paid out, the difference is what you owe HMRC, but if you’ve paid more VAT than you’ve charged, you will be due a VAT repayment from HMRC.
This all sounds quite straightforward, doesn’t it? In theory, at least. But deciding whether to register for VAT voluntarily and which VAT scheme to join, understanding the calculations and doing them accurately, and not least keeping pace with the quarterly return regime, does cause a bit of stress. But, with Daniel Wolfson by your side, you don’t have to face VAT alone.
VAT returns
Having registered for VAT, you are legally obliged to complete regular VAT returns and pay VAT to HMRC. You must complete your returns online and pay HMRC anything you owe electronically on your VAT payment date.
We take great care in calculating and filing VAT returns, so you have a clearer idea of your business’s financial situation. We’ll make sure you don’t have to pay more than is expected and that you get back any VAT owed to you. By keeping your VAT returns accurate and on time, we’re helping growing businesses like yours avoid the stress of late payment penalties and further investigations.
Looking for a VAT accountant? Get in touch with Daniel Wolfson
Don’t let the pressure of VAT stop you from running your business. With our help, you can continue to grow your business throughout the unnerving stages of VAT. Whether you’re on the cusp of VAT registration or VAT is becoming too much to handle, Our experienced VAT accountants will gladly take over.
At Daniel Wolfson, our holistic approach covers every question and concern you might have, putting your mind at ease so you can continue working on your business. We’ll help you pay and claim VAT, submit VAT returns online, stay informed of any changes to regulations, and support you during any VAT challenges you might face.
Get in touch today to hand over your VAT responsibilities to Daniel Wolfson.
Frequently asked questions about our VAT accounting services
Can you guide me through the VAT registration process?
Yes, your accountant at Daniel Wolfson will advise you about the various VAT schemes, help you find the best one for your business, understand your VAT obligations, and guide you step-by-step through the registration process.
What triggers an HMRC VAT investigation?
Late payments without explanation will likely result in a penalty, but they could also trigger an investigation. An inaccurate VAT return can put your business in the spotlight, will probably attract a fine (ignorance is no defence in law!) and make an HMRC VAT investigation more likely.
Compliance checks typically begin when HMRC identifies specific risks, suspects incorrect VAT returns, or receives an incorrect VAT reclaim. HMRC does not randomly issue VAT compliance checks.
What is input and output VAT?
Input tax is VAT applied to goods and services purchased by VAT-registered businesses. To calculate this, you add the total amount of VAT you pay on business purchases. Providing the goods and services purchased relate to onward taxable supplies, the VAT paid can be deducted from the amount owed to the HMRC (i.e. business output VAT).
Output VAT is added to goods and services sold to customers (both businesses and consumers) of VAT-registered companies.
Input vs output VAT example:
A VAT-registered business called DW purchased items of £20,000 (excl. VAT) set at the standard 20% rate. This makes the input VAT total £4,000. In the same period, DW sold goods of £50,000 (excl. VAT), making the output VAT £10,000.
