Debunking VAT Myths
There are many unknowns or simply myths when it comes to VAT and what it is or how it many change due to Brexit.
Although we left the EU on the 31st January, we do have a transition period which is expected to end in December 2020. This means that we expect VAT to continue as it has done until further guidance has been provided by HMRC.
We will let you know of any changes as and when.
What do we know about VAT?
VAT is classed as an indirect tax with the standard rate set at 20%. All businesses are required to submit their accounts digitally as directed by the HRMC with the scheme “Tax Digital”. VAT however does not apply to everyone and thus do not need to be registered. Companies who have turnover/earnings greater than £85,000 must register.
So, what don’t you know about VAT?
- There are 4 rates to VAT, 20% standard, 5% reduced rate, 0% Zero rate and exempt. To know which of these apply to your business, information can be found on the HMRC website or a licenced bookkeeper or accountant can help.
- If you work within some service industry it is beneficial to voluntarily enrol because this allows you to claim VAT back.
- If you sell your services or products within the EU market and VAT applies there are some special rules and you should seek professional advice from a licenced bookkeeper or accountant.
- You can submit your VAT returns either quarterly or annually to suit your companies needs. You can also claim back up to 4 years on allowable goods purchases and up to 6 months on any allowable services.
- The new “Digital Tax” scheme requires businesses to submit their VAT returns via approved accounting software.
We can advise if you need to register, which tax rate applies to you and can meet the HRMC requirements of the “Digital Tax” scheme. Contact us today to discuss your requirements to VAT.