It is not compulsory for all companies to be VAT registered, however, before it is a must to register, some businesses choose to voluntarily do so for a number of reasons.
Whether you are obliged to be subject to VAT treatment because your turnover exceeds the VAT threshold or if you have chosen to be VAT registered, being part of the VAT process requires meticulous bookkeeping and at least one more tax return per year but most commonly four as VAT is most generally processed quarterly.
VAT is a tax added to the cost of your product or service. The tax is collected by you at the point of transaction and subsequently passed on to the government through your annual or quarterly VAT returns. In return for being a collection vehicle, HMRC will allow you to claim back any VAT you have paid to suppliers and deduct this from the amount you hand to them. This is the standard VAT scheme, there is also a Flat Rate scheme.
The VAT you collect should not be confused with your own income. It should be kept aside in preparation for your "VAT bill". Your VAT return is a detailed list of your VAT’able income versus your VAT'able spend. For those reasons the VAT return process can be time-consuming and is often heralded as a chore for small businesses despite the amounts, you can claim back.
By managing your bookkeeping and cash flow VAT can become a pain-free process. Furthermore, great records not only help with your VAT return but can assist you in ensuring you always understand how your business is performing at any time.
At Cottons Chartered Accountants we can advise you on whether your company should be VAT registered or not. If VAT registration would be beneficial to your business or is compulsory, we can produce your quarterly or annual VAT return on your behalf and even assist you with your bookkeeping if required.
As experienced tax advisors and small business accountants, we will give you invaluable advice on the more complicated issues like partial exemptions and Transfer of Business that you might not be on top of if you manage the process in-house.
Contact us to find out more about our VAT services and what we can do for your business. You can include the VAT process as part of a tax and accounting package for your business covering everything from your statutory accounts to director's self-assessments. We have offices throughout the Midlands and in London too, have a look at our locations to find your nearest office. Check out who we work with to see what we can do for your business.