VAT is arguably one of the most confusing areas of tax – which is why many business owners will run into complications when it comes to keeping on top of their VAT requirements and responsibilities.
In the UK, businesses can only charge their customers VAT if their business has been registered for VAT purposes with HM Revenue & Customs (HMRC).
Once registered, businesses must charge VAT on all of their applicable goods and services – but are also entitled to reclaim VAT on any business-related goods or services they might have purchased.
It is important for VAT-registered firms to keep extensive records to support the VAT Returns that are required to be submitted to HMRC once every quarter.
Businesses also need to make sure VAT returns and payments are always processed in good time – as HMRC’s existing penalties regime can prove to be somewhat severe.
Making Tax Digital for VAT
To make things even more complicated, businesses earning above the VAT registration threshold of £85,000 will need to completely change the way in which they report to HMRC in less than 3 months’ time, due to the advent of Making Tax Digital (MTD).
MTD is the Government’s flagship project to digitise Britain’s tax system – and it is being rolled out for VAT from April 2019, before any other taxes are affected.
MTD for VAT will see VAT-registered businesses required to report to HMRC on a quarterly basis using ‘designated software packages’.
At Kirk Newsholme we utilise cloud software such as Sage, Xero, FreeAgent and QuickBooks to support our clients and we want to help you too.
Click here to read our 5 Making Tax Digital Myths https://www.kirknewsholme.co.uk/newswire/jan19-mtd-myths.htm
To find out how Kirk Newsholme can help, please contact Clare Thomas at firstname.lastname@example.org or by calling 0113 2044216.