VAT is one of the easiest taxes to get wrong and one of the most expensive to put right. As a VAT accountant in Uxbridge, Ken Accounting handles registration, quarterly returns and scheme advice for small businesses across West London. We agree a fixed fee up front and file every return on time.
VAT registration
You must register for VAT if your VAT taxable turnover for the last 12 months goes over £90,000. You must also register if you expect your turnover to go over £90,000 in the next 30 days alone.
The timing matters. Under the 12-month test, you have 30 days from the end of the month in which you went over the threshold to register. Under the 30-day test, your registration starts from the date you realised you would go over, not the date you actually did.
Registering late can mean paying VAT out of your own pocket on sales you have already made, plus a penalty. We can monitor your turnover through your bookkeeping and tell you when you are getting close.
Some businesses register voluntarily below the threshold. It can make sense if your customers are mostly VAT registered or you have significant VAT to reclaim on costs. It can be a poor choice if you sell mainly to the public, because your prices go up or your margin goes down.
We help you decide, complete the registration and set up your records correctly from day one.
Quarterly VAT returns under Making Tax Digital
All VAT-registered businesses must follow Making Tax Digital (MTD) for VAT. That means keeping digital records and sending VAT returns to HMRC through compatible software, rather than typing figures into an online form.
Most businesses file returns every quarter. The deadline to submit the return and pay is usually one calendar month and 7 days after the end of the VAT period. You must file a return even if you have no VAT to pay or reclaim.
HMRC uses a points-based system for late returns. If you file quarterly, you get a point for each late return, and when you reach 4 points you are charged a £200 penalty. Late payment brings separate penalties and interest.
Our VAT return service includes:
- Checking your sales and purchase records for the period
- Making sure VAT has been charged and reclaimed correctly
- Spotting common errors, such as claiming VAT on items where it cannot be recovered
- Preparing the return and sending it to you for approval
- Filing the return through MTD-compatible software and telling you what to pay and when
We are a Xero Silver Partner, and Xero files MTD VAT returns directly to HMRC. If we also keep your bookkeeping, your VAT return is prepared as part of the same routine, which saves time and reduces mistakes. See also our Making Tax Digital page for MTD for Income Tax.
Choosing a VAT scheme
The scheme you use affects how much VAT you pay and how much admin you have. We look at your business and recommend the option that suits you.
- Standard accounting. You account for VAT based on the dates of your invoices, whether or not you have been paid. This is the default.
- Cash accounting. You pay VAT when your customers pay you and reclaim it when you pay your suppliers. You can join if your estimated VAT taxable turnover is £1.35 million or less, and you must leave if it goes over £1.6 million. It can help cash flow if your customers are slow to pay.
- Flat Rate Scheme. You pay a fixed percentage of your VAT-inclusive turnover to HMRC and generally cannot reclaim VAT on purchases. You can join if your VAT turnover is £150,000 or less, excluding VAT. It can simplify things, but it does not suit everyone, especially businesses with few costs.
The right choice is not always obvious, and it can change as the business grows. We review it with you rather than leaving you on a scheme that no longer fits.
VAT for travel businesses (TOMS)
Travel businesses that buy in travel services and sell them on as principal often have to use the Tour Operators’ Margin Scheme (TOMS). Under TOMS, VAT is worked out on your margin rather than the full selling price, and the calculations can be complex.
Ken Accounting is a licensed member of the ATOL Reporting Accountants scheme, so we already work closely with travel businesses. If you hold an ATOL, see our ATOL reporting accountants page as well.
[TODO: Gaurav to confirm that Ken Accounting prepares TOMS calculations and VAT returns for travel businesses, and the scope offered]
FAQs
When do I have to register for VAT?
When your VAT taxable turnover for the previous 12 months goes over £90,000, or you expect it to go over £90,000 in the next 30 days alone. You then have a limited time to register, so it is worth keeping an eye on your figures.
Can I register for VAT voluntarily?
Yes. Voluntary registration can help if your customers are VAT registered or you have a lot of VAT on costs. We can work out whether it is likely to benefit you before you apply.
When is my VAT return due?
Usually one calendar month and 7 days after the end of each VAT period. The payment must reach HMRC by the same date.
Do I need special software for VAT?
Yes. Under Making Tax Digital for VAT, you must keep digital records and file through compatible software. We use Xero and can set it up for you.
What happens if I file my VAT return late?
You receive a penalty point. Quarterly filers are charged a £200 penalty once they reach 4 points, and late payment brings its own penalties and interest.