Value Added Tax (VAT) Tips
1. Registering for VAT You should be aware of when your business needs to register for VAT. You must register if your turnover reaches the £77,000 mark in a 12 month period (2012/13 tax year), or you may decide to register voluntarily even though your turnover has not reached this threshold.
2. Choose the right VAT scheme for your business Alongside the standard VAT scheme, you may benefit from joining the Flat Rate Scheme, which was designed to simplify VAT accounting for smaller businesses. Other types of scheme include the cash accounting scheme (whereby you only pay VAT when you have been paid by your customers), and the annual accounting scheme.
3. Impact on customers Once you register for VAT, you will need to include VAT on the costs of any products or services you provider. This will impact your pricing, and will impact any non-VAT registered customers you had, as they won’t be able to reclaim the cost of the VAT themselves.
4. Calculate your VAT liability correctly Make sure you calculate your VAT liability correctly. Many business pay VAT on items they shouldn't and don't reclaim all the VAT that they are entitled to.
5. Book Keeping You must maintain regularly updated, accurate VAT records so that you can complete your VAT returns easily. Make sure you keep all receipts, invoices and other documents in a central place for ease of access.
6. Keep your VAT safe Make sure you keep any VAT liabilities you collect on behalf of HMRC in a safe place – possibly in a separate bank account alongside any other taxes you may have to pay in the future.
7. VAT penalties Try to avoid being late with your VAT returns and payments. Although there is no ‘surcharge’ for an initial late submission, the percentage charged on any VAT liabilities you owe increases according to the number of times you have been late.
8. If in doubt If in any doubt about your VAT responsibilities, get in touch with us.
Best wishes Liam Thompson T
hompsons Chartered Accountants & Business Advisers
Royal Trust House 60-62 Athol Street Douglas Isle of Man IM1 1JD Tel: +44(0)1624 611108 Fax: +44(0)1624 618797 Email: email@example.com Visit our Website: http://www.thompsons-cas.com
Member since: 9th July 2012
We love helping Isle of Man businesses get the recognition they deserve! We bring your great local deals and lots of news on local events on the island..