Posted 6 months ago by Tracy
When running a small business, one of the most daunting areas for many can be managing their tax affairs. With complex, changing rules and serious fines should mistakes occur, managing VAT and other taxes can be a challenge, so the importance of maintaining accurate records and meeting filing deadlines should not be underestimated.
If your VAT taxable turnover goes above £85,000 (or you know that it will go above this value), then you must register for VAT.
Most businesses can register for VAT online. You’ll need to supply information such as your turnover, business activity and bank details, after which you should receive a VAT registration certificate within 30 working days. By registering online you’ll create a VAT online account (sometimes known as a Government Gateway account) which you’ll need to submit your VAT returns to HMRC.
VAT returns are usually completed each quarter and it’s essential that you charge the right amount of VAT on your sales, submit VAT returns on time, keep appropriate VAT records and a VAT account, and pay any VAT that may be due to HMRC.
Keeping on top of your VAT obligations can be time consuming, but accounting software can simplify the process.
Indeed, in the UK, soon all VAT accounting must be managed digitally (i.e. via software), so it’s crucial to choose a solution that meets your needs, adapts to changes and is user friendly.
With the right accounting software, creating a VAT return can be done in minutes, and you’ll always have access to both your VAT accounting and your main accounts in the same place.
When it comes to software, look for a solution that tracks your VAT inputs (i.e. purchases) and outputs (i.e. sales) so its clear on what you owe HMRC or what you can reclaim. Depending on your business, you may also need to account for sales and purchases in the EU, digital services supplies or other VAT scenarios, so be sure your chosen package covers these as well.
AccountsPortal offers a comprehensive and flexible way to manage VAT accounting in any country, including Standard, Flat Rate, EU Digital Services, VAT MOSS and more.
AccountsPortal offers the ability to create custom tax rates, and you can run a VAT report in seconds. Reports are formatted so that filling in your return is a simple task, with automatic submission to HMRC for UK customers via Making Tax Digital.
If you are based in the UK and registered under the VAT Flat Rate Scheme, you could fall under the Limited Cost Trader status. VAT reports in AccountsPortal will take you step-by-step through the implications and calculations associated with this.
To amend your tax status or VAT rates for your organisation, head to Settings > Tax Settings and click on Tax Status. Here you can change your VAT scheme to standard or flat rate. You can also change your accounting basis to accrual or cash and change your reporting frequency, with a choice of monthly, two monthly, quarterly or annually. Choose the date from which the changes apply, and your tax status will be updated accordingly.
By clicking on Tax Rates in this section, you can also add or amend your tax rates and add domestic reverse charge tax rates.
To generate and view your VAT reports, click on the Reports tab and scroll down to Tax Reports. Here you can create and save VAT reports for submission to the tax authority, report VAT on Digital Services into EU countries, and maintain your EC Sales List to ensure you meet ESL submission requirements.
By clicking on the VAT Report heading, you can start a new VAT report or view or delete an existing one. To start a new report, click on New VAT Report, enter a start and end date and your VAT rate if you’re a Limited Cost Trader. Click refresh, and you’ll be taken to a table showing all your VAT-related activity for that period. This will include VAT due in this period on sales and other outputs, VAT due on acquisitions from other EC Member States, net VAT to be paid or reclaimed and total VAT due. From here, you can click through to view each value in more detail, amend the figures or print the document.
By clicking the ‘File with HMRC’ button you can easily and quickly submit your return via Making Tax Digital directly to HMRC.