Outsource VAT Return Services in UK, USA
Tribocon Outsourced VAT Return Basics as follows:
VAT return basics
VAT stands for Value Added Tax. As the name suggests, it’s collected at any time value is added to a product. Businesses generally have to pay VAT to Her Majesty’s Revenue & Customs (HMRC) when they sell or hire out goods or services. There are some exceptions, such as sales outside the UK. But for many businesses, VAT applies to every sale.
It doesn’t matter if your customer is another business or a consumer. However, as a business, you can reclaim VAT that you pay on business expenses – so long as you’re VAT registered.
The VAT return summarises your sales and purchases and the VAT relating to them. All the information you need should be in your VAT records.
The VAT return includes your sales total (excluding VAT) and output tax – the VAT you charged on these sales and which needs to be paid to HMRC. This also includes VAT due on any other taxable transactions, for example, if you barter goods or take them for personal use.
The VAT return also includes details of your total purchases (excluding VAT) and input tax -the VAT you have paid and can reclaim. If you make any sales that are exempt from VAT, you will not usually be able to reclaim all the VAT you have paid. Other purchases where you cannot usually reclaim VAT include most car purchases. You can’t reclaim VAT if you do not have a VAT invoice to prove you paid it.
A summary of any trade with other European Union (EU) countries must also be recorded on the VAT return. UK companies can generally reclaim VAT on imports from the EU, but VAT is charged and accounted for differently.
Tax points, VAT periods, and VAT returns
UK VAT-registered businesses complete a VAT return for each VAT period. VAT periods are typically quarterly, though you can ask for a non-standard VAT period. For example, a business that regularly reclaims VAT from HM Revenue & Customs might boost its cash flow by completing monthly VAT returns. UK businesses can also ask for quarterly VAT periods that match their financial years. Smaller businesses can simplify their VAT accounting by opting for the annual accounting scheme.
Your VAT return summarises all the transactions that took place during that VAT period. For VAT purposes, the transaction date is determined by the ‘tax point’. The tax point is normally, but not always, the date on the VAT invoice. However, if:
- there is no VAT invoice (eg with typical retail sales), and the tax point is normally the date of supply
- payment is made in advance, the tax point is the earlier of the date of payment, and the invoice date
- the VAT invoice is issued more than 14 days after the date of supply, the tax point is the date of supply
There are special tax point rules for situations such as part payments, in some industries and for some VAT accounting schemes. You may want to take advice to ensure you understand what tax point to put on VAT invoices you issue and what to include in your VAT return.
Online VAT returns are due one month and seven days after the end of the VAT period. Payment of any VAT owed is due at the same time, although HMRC will collect direct debit payments three days later.You can work out your VAT payment deadline using the GOV.UK calculator.
Different VAT Schemes Available
Standard VAT Scheme
The scheme that everyone has heard of is the Standard VAT Scheme. The scheme is based on when the invoice is raised. So when you raise a sale invoice, it would automatically be included in the next VAT return. This is fine if you have customers that pay on time but if you struggle with slow-paying customers, then you might find you have cash flow issues, being on this scheme, as you will be paying HMRC well in advance of receiving payment.
paying customers, then you might find you have cash flow issues, being on this scheme, as you will be paying HMRC well in advance to receiving payment.
The Standard VAT Accounting Scheme follows the principles of accrual accounting – meaning that financial activities are reported as they occur, regardless of when the payment is completed.
Within the Standard VAT Accounting Scheme, financial activity is considered to occur on the date a VAT invoice is issued. Income is reported when you raise an invoice for a customer and expenses are reported when you receive an invoice from a supplier.
As such, when filing a VAT Return using this scheme, VAT correlates to the quarter in which an invoice is received or raised, regardless of whether you make or receive payment in a different quarter.
Annual accounting VAT scheme
This is just like the standard VAT accounting method, except that you don’t fill in quarterly returns. Instead, you have an annual VAT reporting and payment deadline. Some businesses keep this the same as their corporation tax filing date, for simplicity.
Once you complete the VAT return, you start making quarterly interim payments for the VAT you estimate that you’ll owe. This method allows you to budget more carefully and because payments are spread throughout the year, it’s often better for cash flow. However, you may end up over-paying or underpaying HMRC at times, so you may be required to make a final balance payment or apply for a refund. Businesses with annual turnover above £1.35 million can’t use the annual accounting scheme.
VAT Cash Scheme
This scheme is based on when a business pays and receives money, rather than when the invoice is raised. This is a good scheme for businesses who have slow paying customers. The VAT return is based on a list of receipts and payments. So the business accounts for VAT on sales, only after receiving payment. This can ease the cash flow for many businesses. Any business with a turnover under.£1.35 million can join the scheme and must leave the scheme if the turnover reaches £1.6 million.
Please be aware that if a business changes VAT schemes, there will be accounting adjustments that will need to be made, in order to ensure that VAT is accounted for correctly. For example, if a business moves from the VAT standard scheme to the VAT cash scheme, outstanding customer and supplier balances will have already been accounted for in previous VAT returns and will need to be adjusted for in subsequent VAT returns.
You can use this scheme in combination with the annual accounting scheme but not the flat rate scheme.
Flat RATE Scheme
Designed to encourage small businesses to register for VAT, with this scheme, you charge VAT at the appropriate rate but pay VAT to HMRC at a lower rate. Your business’s turnover must be less than £150,000 to qualify for the flat rate VAT scheme.
The big advantage of this scheme is that you don’t have to keep a record of the VAT you charge on every sale or pay VAT on every purchase. Instead you can calculate your VAT payments as a percentage of your total VAT-inclusive turnover, which makes it easier and quicker to do your VAT return.
You don’t have to work out how much VAT you spend either. Instead the percentage rate you apply – typically between 9% and 14% depending on industry sector – is designed to take account of the VAT you have spent.
From 1 April 2017, a new flat rate percentage was introduced for limited cost businesses. These are businesses whose expenditure on goods is less than either:
- 2% of their turnover
- £1,000 a year (if costs are more than 2%)
For some businesses it may be unclear if they are a limited cost business, especially if goods are close to the 2% threshold. It is likely to affect you if your main costs are services, vehicle or fuels costs, or if you do not purchase many goods.
To make this simpler HMRC has developed an online calculator to help businesses work out if they are eligible to pay the higher rate. The calculator can be used each time a VAT return is completed to clarify any uncertainty.
This flat rate scheme can be used with the annual accounting scheme. As it contains its own cash based method of accounting, it cannot be used with the cash accounting scheme.
Another area that may be of interest is knowing your choice in when you report your vat returns. Many businesses opt for a quarterly vat return. But a business can also choose to have a monthly vat return or a yearly one. HMRC can insist that a business uses a monthly reporting frequency if the owner had previously had a business that went bankrupt, owing HMRC money. As some people seem to make a career out of running a business for a while, then bankrupting it and moving on to set up another one, HMRC make impose rules on such a business, insisting on a monthly vat return to have an up to date view of the business at all times. HMRC can also impose a bond before the business can begin trading too.
What about the yearly vat return? This is based on the previous year’s trading and the business is expected to pay a regular amount towards their final vat return. If the trade is significantly different to the previous year, the business can contact HMRC and adjust the payment scheme to fall more in line with the current trading year. When the yearly vat return is completed, the balance will be paid over to HMRC and then the process starts again.
Businesses can also ask HMRC to align their vat return reporting period in line with their financial year end. This makes it easier for the accountant to reconcile the vat account at the end of the year, whilst preparing the accounts. This can be done whilst registering for VAT.O
VAT BAS Sales Tax Returns Outsourcing Services
Outsourcing VAT/BAS/Sales Tax returns to Tribocon can help you save cost, time, and money. We at Tribocon, ensure a quick turnaround time with strict adherence to deadlines, enabling you to effectively save time. We have never missed a deadline in the past.
Outsource to Tribocon.
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Why Tribocon for Outsourcing VAT/BAS/Sales Tax Returns from UK, Australia and US
We have tremendous expertise in doing VAT/BAS/Sales Tax Returns for the past 5 years.
Tribocon’s team of skilled professionals brings to the table the required experience and expertise to accomplish this tedious task.
We ensure the fastest turnaround time thereby ensuring the filing of returns within specified deadlines.
We have a proficient financial team who has expertise in Software like SAGE, QuickBooks, HandiSoft, Quicken, TAS, CCH, Peachtree, etc
We have a competent and experienced team for the management of various explicit VAT / BAS / Sales Tax schemes specific to different industries.
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