Why should you hire an accountant to plan your VAT returns?
When a limited company’s turnover reaches £81,000, it must register for VAT with HMRC and file a quarterly VAT return. It is recommended that you hire a limited company accountant to ensure that your VAT return is right.
While you may be able to complete your VAT return on your own, it is not as easy as you may believe. There are several VAT laws, for example, some programs are VAT-free and others have a reduced VAT rate of zero or five percent.
There are three different VAT return schemes to choose from, and determining which one is best for your company is crucial to maintaining a healthy cash flow.
1. Normal VAT Accounting
· The regular VAT rate is 20%, which means you can demand VAT on transactions made.
· Vat returns are due every three months.
· This is done electronically and may include the quarter’s output and input tax.
· For invoices raised in that quarter, you can demand VAT.
2. VAT at a Fixed Rate a strategy
· As a way of incentivizing people to simplify their taxes. allowing you to charge 20% VAT on invoices when paying HMRC at a lower rate
· IT Contractors, for example, have a FLAT rate of 13.5 percent in their first year of business and 14.5 percent after that.
· Contractors would be able to earn more money as a result of this.
· Certain limits exist, and accountants in London will assist you in remaining within them.
3. Cash Accounting Scheme
· This scheme is not available to businesses with a turnover of more than £1.35 million.
· This scheme benefits companies that pay VAT only after their customers have paid for their products or services.
· However, VAT cannot be reported on products purchased for the business that has not yet been paid for. This is done online and must include both production and input tax for the quarter.
Note that VAT cannot be charged on purchases or services that have not been paid for, so check with your accountant about all of your VAT scheme choices before making a decision. As a result, hiring an accountant to complete your VAT returns and provide you with useful advice could save you money in the long run.
