Get VAT Advice to Keep a Clean Record

VAT is the most complex tax regime that is applied to businesses, and many enterprises overpay or underpay the tax on a regular basis. However, there are still many tax planning opportunities that can help a business save on their VAT and pay only what is legitimate and required.

If any business has overpaid or underpaid the VAT, going back up to 4 years because of mistakes or negligence, then it can be rectified, and the concerned VAT account can be brought back in order. It is always better if businesses can identify errors by themselves or else the HMRC (Her Majesty’s Revenue and Customs) has to pick it up, and they may levy interest or penalty on the amount of underreported VAT.

The businesses have to keep a track of their VAT accounts and trends. They should keep proper documentation of the submitted VAT and make pertinent disclosures at applicable times so that they can avoid situations where HMRC can raise the VAT inquiry on their affairs.

However, there are certain VAT schemes offered by financial advisors that can help a business to properly evaluate and submit the tax on the basis of several factors such as goods sold, the amount of VAT as the input cost, credit period given by / to customers or suppliers, and much more. Some schemes mentioned here can help a business to get registered under laws.

Cash Accounting: In this scheme, the client has to pay the VAT only after it has been paid by the customer. The client takes the input credit for the purchase only when he has paid his supplier. It offers a cash-flow advantage and this is why it has become highly popular with start-up businesses.

Flat Rate Scheme: Under this scheme, the client has to pay the tax under a fixed reduced rate set by HMRC for the sold products or services. The business charges the VAT according to a set standard but does not take credit of VAT on purchases. It is a suitable scheme for business owners who want to keep their VAT affairs simple and straightforward, and there are not too many input costs that have to be incurred.

Annual Accounting: With it, the client agrees to an annual VAT liability. The liability is based on the previous year’s figures, and the client has 9 months to pay the liability. It is suitable for businesses which do not have many resources to sort their books quarterly and just want to pay the tax annually.

Retailers Schemes: It is an appropriate scheme for retailers who undertake a large number of small transactions. Here they record and finalise the transactions for each working day, and separate the VAT at the end of the day based on a suitable VAT fraction.