Value Added Tax FAQs
What is VAT?
VAT is a tax that a company is required to charge on its goods and services that it provides to its customers. The current standard VAT rate is 17.5%. .
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What is Flat Rate VAT?
HM Revenue & Customs has identified that certain industries in the UK regularly seek VAT refunds as a result of their trading activities. To lessen the burden of administration and paperwork, these companies are allowed to pay a reduced percentage of VAT to HM Revenue & Customs but are still required to charge the full 17.5% to their clients. This therefore increases your gross take home pay.
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Who has to Register for VAT?
A company is only required to register for VAT with HM Revenue & Customs when its turnover reaches the VAT threshold in any 12 month rolling period. The VAT threshold for the current tax year (2008/2009) is £68000. You can also opt to be VAT registered on a voluntary basis.
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How is VAT Calculated?
The example below will give you a basic idea of how the VAT payment to HM Revenue & Customs is calculated:
Invoice Amount |
£ 1,000.00 |
VAT charged @ 17.5% |
£ 175.00 |
Total invoice to agency/client: |
£ 1,175.00 |
VAT payable to HM Revenue & Customs: |
£ 175.00 |
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Where Can I Get More Information?
For more information you are welcome to contact us on 0808 141 1624, or you can have a look on the HM Revenue & Customs' website by clicking on the following link: www.customs.hmrc.gov.uk
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Should I be Charging VAT on my Invoices?
If your company’s turnover approaches the VAT threshold, you are required to register for VAT.
If you would like assistance with your VAT application, please contact us on 0808 141 1624 and we’ll be happy to help you.
You can only charge VAT on invoices if your Limited Company has been issued with a VAT Registration Certificate from HM Revenue & Customs, and you have been given an Effective Date of Registration.
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Who Would Pay the VAT for My Limited Company?
1st Contact Accounting can assist you with your VAT calculations owed for your Limited Company each quarter and inform you of the VAT payment as well as payment instructions to HM Revenue & Customs.
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When Would my VAT Returns get Submitted and Who Submits Them?
Your VAT return must be submitted to HM Revenue & Customs every 3 months. 1st Contact Accounting can prepare and submit the VAT Returns on your behalf based on the invoices and expenses you have submitted to us.
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How often is VAT Paid?
A VAT registered company is required to pay VAT every 3 months to HM Revenue and Customs. Your quarters will be determined by HM Customs and Revenue, depending on when you register.
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What if I Am Closing My Company?
If you are closing your Company within 6 weeks after reaching the VAT threshold, it is not necessary to register for VAT. However, if you are intending on closing your Limited Company but anticipate invoicing for more than 6 weeks after reaching the VAT threshold, we advise you to register your Limited Company as in keeping within the guidelines set by HM Revenue & Customs. If you have any further questions, please feel free to email your Accountant of call us on 0808 141 1624.
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