VAT returns accountant in Fulham

When you have to register

You must register for VAT if your taxable turnover goes over £90,000 in any rolling 12 month period. It is not based on the tax year or your accounting year. You look back over the last 12 months at the end of every month, and once you cross the line you have 30 days from the end of that month to register.

There is also a forward looking test. If you expect your turnover in the next 30 days alone to go over the threshold, you must register by the end of that 30 day period. This catches businesses that win a single large contract. A builder starting a big refurbishment in Chelsea or an events company taking on a summer festival can find themselves in this position very quickly.

Registering late does not get you out of VAT. HMRC will ask for the VAT you should have charged from the date you ought to have registered, often with a penalty on top, and you usually cannot go back to customers to collect it.

Voluntary registration

You can choose to register below the threshold. It often makes sense if your customers are mostly VAT registered businesses, because they can reclaim the VAT you charge, and you can reclaim VAT on your own costs. It rarely helps a business selling to the public, such as a cafe in Fulham Broadway or a beauty salon on Wandsworth Bridge Road, because adding VAT means either raising prices or cutting margins.

When you first register you may also be able to reclaim VAT on some costs from before registration, such as goods still on hand and certain recent services. We check what can be claimed on your first return.

Choosing the right VAT scheme

Standard VAT accounting is not the only option. The right scheme depends on your margins, how quickly customers pay and how much admin you want.

• Cash accounting: you pay VAT when customers pay you, not when you invoice, which helps if clients pay slowly
• Annual accounting: one return a year with regular advance payments, which suits steady businesses
• Flat rate scheme: you pay a fixed percentage of turnover and keep the difference, but it suits only some trades
• Margin schemes: for businesses selling second hand goods, such as antiques or used cars

Returns under Making Tax Digital

VAT registered businesses must keep digital records and file returns through software that works with Making Tax Digital, unless HMRC has agreed an exemption. Most businesses file quarterly. Each return and the payment are due one month and seven days after the end of the VAT period.

Late returns now earn penalty points, and once you reach a set number of points HMRC charges a financial penalty. Late payment brings separate penalties and interest. We prepare each return from your bookkeeping, check it for errors, show you the figure before filing and submit it on time. If you already use Xero, QuickBooks or similar, we work directly in your software.

Selling online and abroad

VAT gets harder once you sell to customers outside the UK. Goods exported from the UK are usually zero rated, but you need evidence of export. Selling services to overseas businesses often falls outside the scope of UK VAT, while selling to overseas consumers can mean registering for VAT in their country. Sales of goods into the EU now come with customs paperwork and import VAT at the other end.

We work with online sellers and small brands in Fulham and Sands End who ship worldwide from a spare room or a rented unit. We set up their bookkeeping so that UK sales, export sales and overseas service income are coded separately, which makes each return easier to check and far easier to defend if HMRC asks questions.

VAT errors we put right

Small VAT mistakes repeat every quarter, so they add up fast.

• Reclaiming VAT without a valid VAT invoice
• Claiming VAT on client entertaining or on cars available for private use
• Charging VAT at the wrong rate on mixed supplies
• Missing the domestic reverse charge on construction services
• Ignoring the rules on exempt income, such as residential rent, which can limit how much VAT you can reclaim

What to have ready

If you are registering, we need your turnover for the last 12 months, a description of what you sell and who you sell to, and your expected turnover for the next year. For an existing registration, give us access to your bookkeeping software or send sales and purchase invoices and bank statements for the period.

If you have made mistakes on past returns, tell us early. Errors below a certain size can often be corrected on your next return, while larger ones need a separate disclosure to HMRC. Send us an enquiry and we will review your VAT position for free, then agree a fixed fee before any work starts. Businesses in Fulham, Kensington and Battersea all use the same simple process.

Common questions