VAT Returns

VAT is one of the easiest taxes to get wrong. We handle VAT registration (you must register once taxable turnover exceeds the £90,000 threshold), choose the most beneficial scheme for you, standard, Flat Rate, Cash or Annual Accounting, and file accurate Making Tax Digital VAT returns every quarter.

We also make sure you reclaim every pound of VAT you are entitled to and do not reclaim what you are not, the errors that trigger HMRC penalties. If HMRC opens an enquiry, we deal with it for you.

VAT registration and the £90,000 threshold

You must register once your taxable turnover exceeds £90,000 in any rolling 12-month period, or if you expect to cross it within the next 30 days on its own. Registration must be notified within 30 days of the end of the month in which you went over.

Sometimes it pays to register voluntarily below the threshold, particularly if your customers are themselves VAT-registered and you incur recoverable input VAT. Deregistration is also possible once turnover falls below £88,000. Our guide on whether you have to register for VAT explains the tests, and registering early, late or deregistering covers the commercial decision.

The threshold trap most businesses miss

Services you buy from overseas suppliers, advertising, software, consultants, are subject to the reverse charge, and their value counts towards your registration threshold as though they were your own sales. A business under £90,000 of UK turnover can be pushed over the line by its software subscriptions alone, and the rule applies even to businesses whose own supplies are exempt. Our guide to the reverse charge on imported services explains it in full.

Choosing the right VAT scheme

The scheme you use changes how much VAT you pay and how much admin you carry:

• Standard accounting, reclaim VAT on purchases against VAT charged on sales.
• Flat Rate Scheme, pay a fixed percentage of turnover; simpler, and sometimes cheaper for service businesses with few costs, though the limited cost trader rate often removes the benefit.
• Cash Accounting, only account for VAT once you are actually paid, which helps cash flow if customers are slow.
• Annual Accounting, one return a year with instalments, reducing admin.

We model each option against your numbers and put you on the most beneficial one. Our guide to choosing the right VAT scheme works through the comparison.

Making Tax Digital and the filing deadline

All VAT-registered businesses are within Making Tax Digital for VAT: records must be kept digitally and returns filed through compatible software, with a digital link between the two. Returns and payment are normally due one calendar month and seven days after the end of the VAT period. We keep the records, prepare the return, reconcile it to your ledger and file it.

Reclaiming the right VAT, and avoiding penalties

Under the points-based penalty regime, late or incorrect returns carry escalating costs, and interest runs separately on late payment. We make sure your bookkeeping supports every claim, that you recover input VAT correctly, and that you do not reclaim blocked items, VAT on client entertainment being the classic trap. Our guide to the VAT penalty points system explains how the regime actually works.

Newly registered? You can often reclaim VAT incurred before registration, four years back on goods still held and six months on services. See reclaiming VAT from before you registered.

The complex areas we handle

Some VAT positions need specialist attention, and getting them wrong is expensive:

• Partial exemption, where you make both taxable and exempt supplies and can only recover part of your input VAT. See our guide to partial exemption.
• Property and the option to tax, a decision that binds you for 20 years, covered in option to tax on commercial property.
• Construction, where the domestic reverse charge applies between VAT-registered contractors.
• International trade, place of supply, imports and postponed VAT accounting.

If HMRC raises a query or opens an inspection, we manage it on your behalf from first letter to closure.