January 11, 2013

Taxman focuses on late VAT returns

If your business pays its VAT returns late then watch out. This month the taxman is putting all those businesses that fail to submit their VAT returns on time under the spotlight. Over 600,000 businesses submit VAT returns and most do so on time. However, HMRC are launching a new campaign this month and will be warning some 50,000 repeat offenders, who fail to submit VAT returns on time, that their tax affairs will be under scrutiny from 28 February.

The Outstanding VAT Return campaign is cracking down on those businesses with one or more outstanding VAT returns. Some may even have received an assessment of VAT.

This voluntary campaign gives businesses the opportunity to get up to date and pay the tax they owe by 28 February. HMRC might look on businesses that come forward more favourably and offer lower penalties.

Marian Wilson, Head of HMRC Campaigns, commented:

“If HMRC has sent you a VAT return and you have not yet taken any action, this campaign is a reminder to bring your tax affairs up to date. But time is running out.

“After 28 February, if they have not submitted their outstanding VAT returns and paid what they owe, HMRC will use its legal powers to pursue outstanding returns and any VAT that is unpaid. Penalties, or even criminal investigation, could follow. “

Business owners, who are late offenders, can either complete and pay VAT returns immediately or advise HMRC of any change in circumstances e.g. change of business details. Help is at hand – VAT Helpline 0845 010 9000 or visit www.hmrc.gov.uk/campaigns/vator.htm

Of course, businesses that use an Accountant to submit their VAT return can rest safe in the knowledge that everything is in hand.

Important - we endeavour to keep the information on this Site and the Blog accurate and up-to-date as far as possible. However, please remember the content is intended as a helpful guide only and may be subject to change at any time. Please always seek advice from your accountant or Davis Burton Sellek before acting on any of the information provided.

Written by Tags: , , , — Mark Busby @ 4:46 pm


August 9, 2011

VAT reverse charge and cross-border rules

Further amendments to the VAT rules 1 January 2011 and the apparent Reverse Charge procedure are bringing about interesting results for those businesses who need to register and account for VAT in the UK.  The rule changes affect in particular those involved in Construction services (land and property) and those selling from a non EC country to another business in the UK.  The bottom line is that when you buy services from suppliers in other countries you may have to account for the VAT yourself depending on certain circumstances. This is known as the “Reverse Charge” and when it applies you act as if you are both the supplier and the customer i.e. you charge yourself the VAT and then claim it back on your VAT return and the two taxes effectively cancel each other out.

It is more essential than ever that businesses involved in land related supplies such as Construction companies  and those customers and suppliers trading cross borders should gain a thorough understanding of the rules.  Ask your VAT adviser or mark.busbydbsellek.co.uk to explain how the place of supply rules affect you.

Important - we endeavour to keep the information on this Site and the Blog accurate and up-to-date as far as possible. However, please remember the content is intended as a helpful guide only and may be subject to change at any time. Please always seek advice from your accountant or Davis Burton Sellek before acting on any of the information provided.

Written by Tags: , , — Mark Busby @ 11:36 am


November 22, 2010

VAT rise in January. Avoid VAT complacency – at your peril

A business must register for VAT when its taxable sales hit the £70,000 mark in any previous 12 month period or within the next 30 days. January is a busy month as far as VAT is concerned. 1 January 2011 sees the phasing in of new VAT cross border place of supply rules for services as well as the standard rate of VAT going up on 4 January 2011.

The Coalition announced in the Budget Report on 22 June 2010, that the standard rate of VAT would go up from 17.5% to 20% from 4 January 2011. What is less well publicised is that flat rate VAT percentages for some small businesses will go up too.

Click here for Jan 2011 VAT increase

For any sales of standard-rated goods or services that take place on or after 4 January 2011 businesses should charge VAT at the new rate of 20%. So businesses that currently calculate VAT using the VAT inclusive fraction of 7/47 should use the new fraction of 1/6 from January.

There are certain circumstances when you should use the old rate of 17.5% if a business has:

  • provided goods or services more than 14 days before the issue of a VAT invoice (e.g. a business which issues a VAT invoice on 4 January 2011 for goods or services provided before 21 December 2010); or
  • received payment for goods or services before 4 January 2011.


There are a number of schemes for small businesses designed to reduce the amount of administration and costs involved with VAT.

  1. Although the cash accounting scheme allows businesses to account for VAT at the point that payment is received, it does not affect the amount of VAT due and receipts after 4 January 2011 should be correctly identified as supplies made at either the 17.5% or 20% rate. Therefore, care needs to be taken.
  2. The rules for annual accounting should not require any adjustment as a result of the change to the standard VAT rate but if you do expect your VAT liability to change significantly before the end of the accounting period, please contact us to help you calculate revised instalments for consideration by HMRC.
  3. The flat rate percentages do not automatically increase by 2.5% and will depend on your business. Flat rate – the best kept secret

There is no change to the fuel scale charges 1 May 2010 but the VAT element will be recalculated.

Avoid penalties for late VAT cheque payments

A cheque typically takes 3 working days (but check with your own bank) to clear and so must be sent in good time to reach HMRC’s bank account before the VAT Return due (submission) date to avoid penalties.

Businesses should seek professional advice on the proposed changes to understand the impact on their business and for assistance with any practical implications.

Read more on VAT return advice and VAT advice

Important - we endeavour to keep the information on this Site and the Blog accurate and up-to-date as far as possible. However, please remember the content is intended as a helpful guide only and may be subject to change at any time. Please always seek advice from your accountant or Davis Burton Sellek before acting on any of the information provided.

Written by Colin Willett @ 3:59 pm


November 8, 2010

Flat rate vat – the best kept secret

Many small firms are simply unaware that the flat rate vat scheme even exists. The flat rate was introduced by HM Revenue & Customs in 2002 to help small businesses reduce the costs of VAT by simplifying the process of calculating it. Needless to say since then the scheme has not been very well publicised.

HM Revenue & Customs claim nearly 192,000 small firms are registered for flat rate but I’m certain more small firms could benefit from lower VAT and less administration if only they knew the scheme existed!

To be eligible depends on your VAT exclusive turnover not exceeding £150,000. The flat rate will rise on 4 Jan 2011 along with the standard rate but the flat rate will vary according to the type of business you are.

See here for flat rate changes and VAT checklist

Here are some useful reminders about the flat rate scheme:

  • Businesses in Year 1 of VAT registration can benefit from a 1% reduction in the flat rate
  • You are eligible for the scheme if your annual taxable turnover (not including VAT) will be £150,000 or less; and your annual total turnover (including VAT) will be £187,500 or less
  • If you make a one off capital purchase with an invoice value, including VAT, of £2,000 or more, you can claim the input tax on your VAT return in the normal way
  • Continue to invoice clients at the normal 17.5% rate (from 1st January 2010)
  • The flat rate scheme is voluntary – you can leave at any time
  • You can use the scheme until your total business income is more than £225,000

The flat rate scheme is not for everyone but it’s worth a conversation with your accountant so you choose the right VAT scheme for your size of business.

Important - we endeavour to keep the information on this Site and the Blog accurate and up-to-date as far as possible. However, please remember the content is intended as a helpful guide only and may be subject to change at any time. Please always seek advice from your accountant or Davis Burton Sellek before acting on any of the information provided.

Written by Colin Willett @ 8:40 am


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