VAT – Make your life simpler

Have you considered using either or both the Annual Accounting and Flat Rate Schemes?

Annual accounting is just that – you will only have to complete one VAT return each year and this has to be submitted 2 months after your tax period has ended. You will have to make interim payments during the year (usually nine) and a balancing payment when your return is completed. Admission to the scheme is subject to conditions including taxable turnover of less than £1.35M.

The Flat Rate Scheme can make completing your VAT Return even simpler.

How does it work? You multiply your total VAT inclusive turnover for the tax period by the percentage relevant to your business type and this is the amount you pay, there is generally no claim for input tax. The only adjustment you would ever make was if you bought an expensive capital asset – if it cost £2,000 or more, including VAT, you can claim the input VAT on this item.

The flat rate scheme is not right for everybody, as some of the percentages set by the government result in more VAT being paid. However for some businesses there can be both an administrative saving as well as a tax saving. Admission to the scheme is subject to conditions including taxable turnover of less than £150,000.

We can help

Unfortunately the UK tax system is getting increasingly complex… resulting in an increasing number of tax pitfalls for the unwary. The good news though is that there are also many opportunities to pay much, much less tax… and in some cases none at all.

The key message is to seek advice early. Many tax planning opportunities are only available if put in place before undertaking a transaction, such as the purchase of a property.

If you would like to discuss ways in which you may be able to make tax savings then please do not hesitate to contact us.

We would be delighted to advise you on any of the issues identified in this edition of “Pay less tax.”