Paid tax on all supplies made within the UK by taxable people is best known as Value Added Tax (VAT). If you are the owner of a business that is registered to submit VAT returns, you are essentially required to file returns to the HMRC on a quarterly basis or as per the selected VAT scheme’s filing standards. To ensure that you should not be failing to submit your returns, the HMRC provides you with a VAT return that is essential to file back within 30 days after the quarter ends. HMRC also indicated the actual deadlines on the return to ensure that you must not miss the deadlines or become vulnerable to face heavy penalties.
VAT returns are payable either by an individual, limited company, or a partnership as long as one is registered to pay the returns. The VAT paid to Her Majesty’s Revenue and Customs is premeditated through getting the net difference of paid VAT by customers at the current rate of 20%.
Get Your Estimated VAT Returns
VAT tax regulations permit you to submit predictable/estimated tax returns with the proviso that you provide HMRC with a solid reason for why you want to do so. Some of the reasons that can prompt you for submitting estimate VAT returns could be;
– The change in staff
– Unexpected delays in getting third party data
– Changing accounting software or system
Giving any of the considerable reasons to convince HMRC for allowing you to submit estimate returns makes you bound to provide accurate data and information on the next returns. To get permission for estimate return submission, you have to make an application to the HMRC stating reasons.
Exempt and Partially Exempt VAT Supplies
There are some particular goods and services that are totally exempt from VAT; however, others have a partial exemption. If you offer such exempted or partially exempted supplies, it can make a bigger impact on the VAT that you can reclaim from HMRC on all your purchases. For example, if all of your products or services fall under the VAT exempted category, you will be unable to even get your business register for VAT, and consequently, you will be getting no refunds or reclaims on your business expenses or purchases. Your business can be classified as partially exempt if your business is registered for VAT, and you are obtaining Vat on the supplies that are used in making exempt products or supplies.
Certain of the examples of VAT-exempt goods and services are:
– Charitable fundraising events
– Finance, Credit, and insurance services
– Membership registration of any institute
– Leasing, letting, and selling of any commercial land or building
As these supplies are exempt from all kinds of VAT, they are non-taxable. So, while filing your VAT return, you do not need to include sales on such goods and services, and similarly, you also cannot reclaim VAT on the purchase of such products or services for your business. A notable thing here is that there are certain supplies that are called as zero-rated. Zero-rated supplies also do not add VAT to the selling prices, but they are vat taxable at a 0% rate.
What Are Partly Exempt Businesses?
If you are getting Vat on the acquisition of the supplies, which are VAT exempts, then your business fall in partly VAT exempt businesses. In such a case, the tax is referred to as exempt input tax. You cannot make claims for it, but there are certain ways in which you can recover it fully if it is under a certain amount.
If you buy supplies that are tax-exempt, but you make their use for personal purposes instead of business, then you cannot reclaim VAT on them. And if you buy such supplies and use some of them for business and others for personal usage, then you have to allocate VAT accordingly. To become aware of how much you need to reclaim, using partial, exemption methods can help you. Even if you are into a partially exempt business, it will be vital to keep the detailed records like exempt sales, how you worked out, and how much you should claim separately.
How to Submit the HMRC VAT Return Form?
The latest tax law necessitates all businesses to submit their VAT returns online and make all the payments to HMRC electronically. However, there are exemptions too that can help you go for alternatives for submitting Vat returns to the HMRC. Such exemptions include;
– Your business contains members of a particular religious group that does not allow them to use computers.
– Inability to use computers due to any disability, age, or remote living factors.
– You can deny for online submissions of VAT returns if you are subject to insolvency proceedings, but if you have any voluntary arrangements, you can still go for online submissions.
Benefits of Online VAT Submissions
There are multiple benefits of submitting Vat returns online, such as;
– Online submission is one of the most secure and easy ways to file your returns.
– Instant receipt messages from the HMRC on receiving returns
– Easy to set reminders and file your returns as per your schedule and avoiding missing and facing penalties
– In comparison to manual paper returns and check payments, submitting via an online portal gives you 7 additional days to submit your returns. In case if you pay your Vat via direct debit online, you can get 10 extra days to submit.
If you want to utilize an online return portal to submit your returns, there are some points that you must acknowledge. They include;
- You should use an online filing mechanism if you want to
– Get notices to register for VAT
– De registration notifications
– Give notice to HMRC regarding making any changes to VAT registration details
– Send notification for applying to tax-exempts due to getting zero-rated supplies
– Voluntary registration/deregistration for Vat
– Request transferring your VAT registration number
- You can only utilize the online VAT return portal if you hold a government Gateway account. If you do not have one, you will be provided at the time of VAT registration. Although, HMRC holds the right to deny you from giving access to online services in case if they are trying to secure the revenue.
- The following types of people are prohibited from utilizing online portal;
– Organizations or people who necessitate Government registration numbers
– Anyone notifying or applying supplies from other EU members
– People or organizations that are notifying disposal of assets whose VAT refund has been reclaimed
What Does A VAT Return Include?
Usually, a Vat return includes;
– Total sales and purchases by a business during the stated period
– The sum of Vat owed to the HMRC
– The total amount of reclaimed VAT
– The net payable/refundable amount
Understanding Bad Debt Relief
If you have delivered goods or services to any customer and are not paid yet, you are into bad debt. If your business is meeting all the requirements of VAT, then you can take advantage of bad debt relief. Either the debt owed to you is the form of goods/services or money, you can claim relief. Generally, it happens when people invest in peer to peer loans through lending platforms approved by the financial conduct authority.
How to Claim Your Bad Debt Relief?
For reclaiming your debt, you have to meet some conditions, which are;
– Counting the VAT on the debt supplies offered is a must, and you should be paying it to the HMRC
– You should not have sold the debt
– You should have been charged the market price for the supplies and not more than that.
Sometimes it becomes quite difficult to know whether you should go for reclaiming VAT debt relief or not. In such circumstances, for you, it becomes essential to have the support of professionals, and 101Accountant is there to facilitate you to end limits in this regard. Our professional accountants have the ability to keep you updated about your VAT deadlines and assist you in preparing error-less returns and filing promptly.
The Process of Reclaiming Your VAT Debt Relief
Once you hand over the responsibilities of coping with your tax returns, we will be paying inclusive attention to your accounting books to make sure that all the paid VAT on your purchases or business expenses is reclaimed. We also try our best to make you pay the least possible taxes to the HMRC. We do this by using all the legal means and keep you at the safe end.
Prior to filing your Vat returns, we run multiple checks and go through records to confirm their accuracy and provide them to our clients for the confirmation, so we can forward them to HMRC. We do so to make sure that you should remain safe and eliminate the chances of claims for wrong tax figures and other possible legal complications.
We have all the skills and expertise to manage all return filing and have a strong portfolio of satisfied clients in the UK. We make it smooth and easy for our clients to remain relaxed and worriless about missing deadlines or inaccuracies in the returns. We offer the online VAT return services, that is how we had managed to our repute among many competitors in the market.
Preparing For a VAT Inspection
While running a limited company, you should be expecting regular visits by the HMNRC officials that take place in the duration of 4 to 6 years. People exaggerate about the inspections, but there is nothing to be worried about if you are not engaged in any serious VAT fraud within your company, it will be just a routine check. And if you have the support of professio0nal accountants like 101Accountant, there are negligible chances that you may get troubled with the HMRC.
The moment you get your business registered with HMRC for Vat, you take responsibility for receiving and accounting for the government’s Value added tax. The HMRC official will just come to make sure that you are keeping your words and are acting accordingly. 101Accountant will help you to file your VAT returns such that you are keeping your words.
HMRC Notifies You before Inspection
The inspection by the HMRC official will not be happening as a surprise; you will be notified by the local HMRC officials that your business is selected for the inspection. You will agree on any particular date within 30 days after the notification or call. On the agreement of date, you will be getting a letter from the HMRC office stating the agreed date, officer name, and the time when it will take place.
Things to Prepare
The letter from the HMRC also states about the needed documents. According to the laws of the HMRC, your documents should be dated back at least three years to the last occurrence of inspection. The needed documents include;
– Your Vat accounts and other relevant documents
– Annual accounts
– Accounting books including daily sales and purchase books, petty cashbook, cash book, and all other accounts
– Supporting documents like correspondence and contracts
– All the bank statements
– VAT registration details and certification
On the agreed date, the assigned inspection officer prefers to meet you at the registered business address, and for that, your company’s director needs to be present during the inspection. And if you are taking advantage of freelance accountants, this meeting can take place in your accountant’s office for which you and your accountant must be present there at the agreed time and date.
Once the meeting takes place, you are likely to give a brief overview of your company or business that should entail details like when it started, what you deal with, total turnover, and types of records that you manage. After that, you are required to provide the officer with the business records. He /she will spend at least two hours going through everything to ensure that everything is inline.
Once the HMRC official gets done with the records, he/she will be providing you with findings and will advise you if any errors come across in your records. The inspection officer can also give you recommendations and suggestions for better accounting procedures to minimize errors. Once the inspection is done, HMRC will send you a letter stating all the required adjustments to make in your records, and these adjustments are supposed to be made in the coming Vat return filing.