VAT – A brief overview 

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A transaction is within the scope of VAT if:

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• There is a supply of goods or services

• It was made in the UK

• It was made by a taxable person

• It was made in the course of business

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Output VAT

Businesses charge VAT on their sales. This is known as output VAT. Essentially this VAT is being collected by the business on behalf of HMRC.

Input VAT
VAT is charged on most goods and services purchased by the business. This is known as input VAT. Items purchased are normally charged at standard rate (20%) or zero rated (0%) and more so lately (5%). Some supplies are exempt eg Road Fund Licence.

When to register
Your business is required to register for VAT if your taxable turnover exceeds £85,000 (this has been the rate since April 2017).

Voluntary registration
A business can request to register for VAT even if they have not exceeded the turnover limit of £85,000. It maybe that customers require your business to be VAT registered.

VAT Return submission
VAT Returns are normally submitted on a quarterly basis. If a period is for example 1 January to 31 March, the Return needs to be filed with HMRC by 7 May (ie one month and 7 days after the end of the quarter). Payment is then taken 3 working days after the 7th of the month. If a refund is due this will be paid within 3 weeks of the Return being submitted.

Please contact us for further information regarding VAT.