Useful Advice On Navigating VAT Returns for Business
VAT Returns for Business – Again, it is important to remember that you are likely to face penalties for not keeping current with VAT returns. Our aim is to describe the possible outcomes for those who fall behind and to discuss remedies for those already having difficulties.
Penalties For Arrearages
Ensuring that VAT returns are prepared is an essential part of operating a business over the long term, especially if you have arrearages and lack the funds to pay assessed fines. They’re a sales tax after all. VAT returns have a deadline of one calendar month plus seven days following the relevant accounting period. Unless a strong reason exists for not doing so, VAT returns are now required to be filed on the Internet through the HMRC portal. Though HMRC can grant a grace period for firms if they have not had a late payment for a period of 12 months, there are almost certainly still going to be fines assessed.
Though it is true that smaller firms, such as those with lower than £150,000 in turnover will still contend with penalty assessments, it is the larger companies that need to worry about additional ramifications of noncompliance. For an initial default, there will be no surcharge added, but all subsequent ones will bring about penalty assessments. More can be read about arrears and the fines that follow.
Lots of reasons exist for incurring significant penalties, and these can include registering late or not at all, filing returns after the deadline, paying an incorrect rate of VAT and late payment of the amount stated on the VAT return. It is important that HMRC is contacted as soon as possible to discuss payment arrangements if timely remittance is not feasible.
Facts About VAT Returns
It bears repeating that failing to complete a VAT registration can prove extremely detrimental for businesses, given the penalties they will face as a result. Lots of small entities do not bother to register because they assume they will not achieve the revenue required to participate. Of course, HMRC does not deem this an acceptable rationale, and penalties and appearances will accumulate regardless. Growth Hacking is not just about about driving cool marketing conversions. Its about running a business. And in the UK VAT returns are a big part of business.
In order to steer clear of unhappy surprises and growing debts, it is essential that you contact HMRC and talk about the reasons you are unable to pay outstanding amounts, how you can go about initiating payments, declare your ability to make a payment right away and determine estimated repayment periods.
Remember that sole traders are required to prepare VAT returns on a quarterly basis, and debts so incurred are deemed personal in nature. Thus, these debts can result in seizures as well as the possibility of a petition for winding up.
Advice On VAT Return Preparation
Every company needs to file VAT returns that are accurate, and this is possible with the help of a dedicated bookkeeper or a professional accountant. The majority of accounting-related software applications can pre populate return forms so that the process is easier than ever before. But, should you still find the task to be a challenge, it is wise to talk with an accountant, because having incorrect information on a return can prompt a tax inspection or the assessment of additional penalty amounts. Businesses in the grips of a cash flow crisis might wish to pursue insolvency guidance if they wish to try and preserve the firm.
Useful tips for Keeping On Top Of VAT Returns
Accuracy of VAT Charges
Making certain that the proper rate of VAT on the services and goods you sell is a crucial first step. The UK’s standard rate for VAT is 20 percent, and this applies to the lion’s share of goods. Again, this is not universally the case, and there are some goods and assets that trigger a reduced rate of VAT.
Applying The Correct Scheme For VAT
There are several methods of remitting VAT amounts, but it is important to always select the right one so that returns are always on track.
Standard Method For VAT Accounting
This involves maintaining detailed records of all amounts of VAT charged and paid. These numbers will then be utilised as a way to calculate the return for submission to HMRC.
Annual Scheme Of VAT Accounting
This method is useful for any business with less than £1.35 million in turnover. Just a single VAT return needs to be submitted and after that, the company can make payments of estimated liabilities on a quarterly basis.
Scheme Of Flat Rate VAT
The majority of smaller-scale businesses that have annual turnover lower than £150,000, this process requires payment of a set percentage of turnover designed to pay for all tax liability amounts. VAT will still be charged on the aggregate of all invoices, but there is no need to maintain records of every VAT transaction.
Method Of Cash Accounting
This is a scheme that requires payment of VAT on sales at the time of customer payment and also the reclamation of VAT on purchases at the time suppliers are paid.
If determining which scheme makes the most sense is proving difficult, ask for professional advice with regard to VAT return preparation. Failing to make payments will result in surcharges, so do not delay.
Every business needs to maintain solid VAT records for no less than a six-year period. This documentation must be comprehensive and easily read. Taking pains to properly record every transaction is the best way to keep your company safe. If you ever have a need for insolvency assistance or must confront potential liquidation, documentation of this sort will demonstrate your history of acting in good faith.
Direct Debit Payments
Perhaps the most valuable tip when it comes to managing debt is to make VAT return payments via direct debit. This ensures that HMRC will receive the appropriate funds directly from your financial institution within a three-day window of the actual deadline. This means your VAT obligations are always going to be timely met. Of course, quarterly returns must still be send, and late filing of these will trigger a delayed payment no matter what.
It is also possible to request reminder notices once you log in to the online account management page. This way, you can rest assured that no deadlines will be missed. Any company that is having difficulty paying bills on time should explore insolvency options as soon as things begin to appear shaky. The business assistance professionals with our firm stand ready to guide you toward the solution that best suits your needs.
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