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CH12 VAT [2] - Coggle Diagram
CH12 VAT [2]
annual accounting scheme
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business may join the annual accounting scheme if value of taxable supplies (excluding VAT and supplies of capital items) in the following year is not expected to exceed £1.35m :star:
businesses already in the scheme can continue using it until the value of taxable supplies in the previous 12 months is greater than £1.6m :star:
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flat rate scheme
allows businesses to calculate net VAT due to HMRC by applying a flat rate % to their VAT-inclusive turnover rather than accounting for VAT on individual sales + purchases
VAT payable to HMRC at end of VAT period is:
flat rate % x VAT-inclusive turnover for period (turnover includes taxable supplies, exempt supplies and supplies of capital assets)
no deduction for input VAT, except for certain capital assets over £2,000 :star:
business will issue tax invoices using normal rules + applying appropriate rate of VAT eg. standard rate, zero rate
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business can join flat rate scheme if value of annual taxable supplies (excluding VAT) does not exceed £150,000
business must leave scheme if total annual income (inclusive of VAT) exceeds £230,000 - this includes exempt income
VAT periods
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HMRC allows taxable persons to have 1 month VAT period where input tax regularly exceeds output tax (ie. where taxable person is in a net VAT repayment position).
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VAT return
all VAT-registered businesses must submit their VAT returns (Form VAT100) online + pay any VAT due electronically.
VAT return must show amount of VAT payable/recoverable + be submitted to HMRC no later than 1 month and 7 days following end of prescribed accounting period :star:
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if payment is made by direct debit, it is automatically collected a further 3 days after due date :star:
businesses that file annual returns/make payments on account have special due date for their returns :question:
payments on account
substantial traders (taxable persons with annual VAT liability over £2.3m :star:) make payments on account of VAT for each quarter (electronically)
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balancing payment for the quarter is due with the VAT return at end of the month following the end of the quarter :star:
cash accounting scheme
allows for businesses to account for VAT on basis of cash paid + received, rather than invoices received + issued.
small businesses may join cash accounting scheme if:
- value of taxable supplies (excluding VAT + supplies of capital items) in the following year is not expected to £1.35m;
- businesses must have submitted all VAT returns to date + paid all outstanding VAT; and
- must not have been convicted of a VAT offence/penalty in the previous 12 months
businesses already in cash accounting scheme may continue to use it until value of taxable supplies in previous 12 months exceeds £1.6m.
VAT records
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VAT invoice must contain details such as tax point, VAT reg no. and details of supply
full VAT invoice must contain:
- unique identification no.
- business, name, address + contact
- name + address of customer
- clear description of goods/services
- date of invoice + tax point if different
- price, quantity + VAT rate for each item
- any discounts offered
- amount charged excluding VAT
- total VAT charged
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