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VAT Filing

VAT filing in the UK, done by JAKS , typically involves several steps to ensure compliance with HMRC regulations

VAT Registration

Threshold: Any business selling goods and services earning more than Β£ 85 000 in any twelve months must register for VAT.

Voluntary Registration: Businesses whose compliance with the turnover threshold is below the required shall also register for VAT on their initiative.

VAT Number: After registration, an enterprise is assigned a Unique tax identification number for VAT.

Charging and Collecting VAT

Output Tax: VAT is charged on most sales and paid on some goods and services provided. Reduced rates of 5% are also available, and zero rates are applied to some items where the standard rate is 20%.

VAT Invoices: Business entities must send customers the VAT invoice for their sales with the correctly charged VAT amount.

Recording Transactions

Sales Records: Sales should be well documented, just like all other operations, and this should include the account of all invoices given.

Purchase Records: Ensure you maintain proper records of all transactions that attract VAT.

Preparing the VAT Return

Calculation: Calculate the gross value of the sales made in the period you are reporting, and calculate the total value of the VAT contained in the gross figure of the sales value.

Form: Complete the VAT return form and total sales, purchases, output tax, input tax, and net VAT payable or recoverable.

Submitting the VAT Return

Digital Submission: VAT returns should be filed by the due date via the MTD for VAT or software link to HMRC.

Frequency: Tax returns can be filed yearly or monthly, depending on the business decision.

Payment or Reclaim

Payment: When the tax obtained is higher than the taxed supplies, the difference must be reimbursed to HMRC.

Reclaim: Where the input tax exceeds the output tax, the excess can be claimed back from HMRC.

Submitting the VAT Return

Digital Submission: VAT returns must be filed online using the HMRC MTD service or appropriate functionally compatible software.

Frequency: Returns are typically provided at the end of each quarter, but some businesses may provide the figures monthly or yearly.

Payment or Reclaim

Payment: If the output tax is more than the input tax, the amount has to be paid to HMRC.

Reclaim: Where the input tax is greater than the output tax, this is credited to the business and can be recovered from HMRC.

Deadlines

Submission and Payment: The VAT return and any payment due must be filed within one month and seven days of the end of the VAT period.

Penalties: In most cases, additional charges and interest will be attached to tardiness and late payments.

Record Keeping

Retention Period: Companies must retain records about VAT for at least six years.

Digital Records: According to MTD, creating electronic records of all VAT transactions is mandatory.

Compliance and Audits

Regulations: Compliance with all the VAT Acts and regulations applicable in the country regarding the right application of the VAT rates and proper invoice issuance.

Audits: This means that, over time, HMRC may audit a company to see if it complies, and therefore, proper records must be kept.

Process

  • You should register for VAT if your monthly turnover exceeds the stated limit.
  • Acc recovery of VAT on sales and issue of correct VAT invoices to customers.
  • Record all transactions accurately.
  • Determine the amount to be paid or the amount that can be claimed back to complete the VAT payment table.
  • Complete the online filing of VAT returns through MTD.
  • This application allows a user to remit VAT due to HMRC or recover VAT due to the user.
  • It is recommended that records be retained for at least six years.
  • The above steps will enable the various businesses in the UK to adhere to their VAT compliances.

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