VAT tax point

The VAT tax point or time of supply is the date the VAT on the goods you supply and services you provide to your customers become collectable on behalf of and payable to HMRC. Your time of supply for each VAT transaction can vary depending on the situations.

SituationTax point
Where you have issued a VAT invoiceDate of Invoice
Where a VAT invoice is issued after 15 days of the date of supplyDate of supply took place
Where no invoice is issued or needed.Date of supply
Payment or invoice issued in advance of supplyDate of Payment or invoice (whichever is earlier)
Where payment received in advance and no VAT invoice issued yet.Date of Payment
source: HMRC

Your VAT return

Determining your tax point correctly allows you to record your VAT transactions correctly in your VAT return.

For example, if you are a kitchen supplier and installer, you usually issue invoices to your customers after installation is complete. For VAT return purposes, the date of supply is your tax point, not your invoice date.

VAT cash accounting scheme

If your business has joined the VAT cash accounting scheme, your tax point is always the date you received payments from your customers. If you are not using this scheme, generally you follow the situations guideline above to decide your tax point.

Other tax point rules

Further read about tax point rules, click here.

Companies House filings

Additionally, if your VAT registered business is a limited company, you must also deliver your company accounts and confirmation statement to Companies House promptly.

If you require any help with your VAT returns, feel free to contact our accountants, they will be more than happy to assist you.

File a VAT return under the Annual Accounting Scheme

There are special rules that apply to file a VAT return under the VAT Annual Accounting Scheme. This VAT Annual Accounting Scheme is suitable for businesses with a turnover of up to £1.35 million. If your turnover has exceeded this threshold, your business can stay in the scheme as long as your turnover does not go over £1.6 million significantly. Thereafter, your business must leave the scheme at the end of the annual accounting VAT Return year.

Even though you only require to file a VAT return under the Annual Accounting Scheme, you must pay your VAT by instalments. You can choose to pay quarterly or 9 monthly. You estimate the amount of VAT you expected to owe to HMRC at the end of your Annual Accounting VAT return period. Your VAT instalment payments must be paid by Direct Debit, Standing Order, bank transfer or by BACS.

Under this scheme, you complete your VAT return in the normal way for the VAT period.

How to complete and file a VAT Return under the Annual Accounting Scheme

Box 1VAT due in this period on Sales£100,000.00
Box 2VAT due in this period on EC acquisitions£0.00
Box 3Total VAT due (the sum of Boxes 1 and 2)£100,000.00
Box 4VAT reclaimed in this period on purchases£45,345.00
Box 5Net VAT to be paid to Customs or reclaimed by you (Difference between Boxes 3 and 4)£54,655.00
Box 6Total value of sales, excluding VAT£500,000
Box 7Total Value of purchases, excluding VAT£226,725
Box 8Total value of EC sales, excluding VAT£0.00
Box 9Total value of EC purchases, excluding VAT£0.00
Source: GOV.UK

How to fill in each box is explained

You will fill in Box 1 to Box 9 as you would normally do under the Standard VAT scheme except for Box 5.

BOX 5 – Do not deduct any instalments you paid to HMRC from net VAT to be paid to HMRC.

Say, you choose to pay your VAT instalments in 9 months at £6000 per month. You do not deduct £54,000 already paid to HMRC from £54,655. Instead, you file your annual accounting VAT return and the balance of the payment owed to HMRC of £655.

Companies House filings

Besides, maintaining good VAT accounting records and submitting your VAT return on time to HMRC, if your VAT registered business is a limited company, you must also deliver your company accounts and confirmation statement to Companies House promptly.

If you require any help with your VAT returns, company accounts and confirmation statement filing, feel free to contact our accountants, they will be more than happy to assist you to comply with your filing requirements.

Prepare a VAT return under the Flat Rate Scheme

There are special rules that apply to prepare a VAT return under the VAT Flat Rate Scheme. This VAT Flat Rate Scheme is suitable for small businesses with yearly sales of up to £150,000. Under this scheme, you calculate your VAT by applying a flat rate percentage to your total sales including VAT.

For example, your total sales including VAT for the VAT return period is £85,500 and you are in the publishing business, the flat rate percentage for a publishing sector is 11%. In this instance, your VAT payable will be £9405.

How to complete the VAT Return under the Flat Rate Scheme

Box 1VAT due in this period on Sales£9,405.00
Box 2VAT due in this period on EC acquisitions£0.00
Box 3Total VAT due (the sum of Boxes 1 and 2)£9,405.00
Box 4VAT reclaimed in this period on purchases£0.00
Box 5Net VAT to be paid to Customs or reclaimed by you (Difference between Boxes 3 and 4)£9,405.00
Box 6Total value of salesexcluding VAT£85,500
Box 7Total Value of purchases, excluding VAT£0.00
Box 8Total value of EC sales, excluding VAT£0.00
Box 9Total value of EC purchases, excluding VAT£0.00
Source: GOV.UK

How to fill in each box is explained

Box 1 – Let use the same example above, you are in the publishing sector and the flat rate percentage is 11%. The VAt calculated on the annual sales of £85,500 is £9,405. You enter £9,405 in box 1.

Click here for a list of trade sectors flat rate percentages approved under the Flat Rate Scheme.

Box 4 – If you use the VAT flat rate scheme, you do not normally make a separate claim for input VAT including any VAT on imports or acquisitions. This is because the flat rate percentage for your trade sector includes an allowance for input VAT.

However, you can recover VAT on any single purchase of capital goods of £2000 or more inclusive of VAT and VAT on stocks and assets in hand at registration.

Additionally, you use Box 4 to claim bad debt relief and to account for reverse charge transactions.

Box 6 – You enter the total value of sales including VAT.

Plus the following transactions in Box 6:

  • Sales less the VAT amount not accounted under the flat rate scheme. For example, you bought a business asset that you have reclaimed input VAT on.
  • EC sales
  • Reverse charge transactions

Box 7 – Generally there will no figure in this box unless you bought business assets costing more than £2000 including VAT and you are claiming the input VAT in box 4.

In addition, you also include the following in Box 7

  • EC purchases
  • Reverse charge transactions

Companies House filings

Besides, maintaining good VAT accounting records and submitting your VAT return on time to HMRC, if your VAT registered business is a limited company, you must also deliver your company accounts and confirmation statement to Companies House promptly.

If you require any help with your VAT returns, company accounts and confirmation statement filing, feel free to contact our accountants, they will be more than happy to assist you to comply with your filing requirements.

Check EU VAT number

You are encouraged to check the validity of the EU VAT number of your customers and suppliers on a regular basis. Especially before you remove the VAT from your invoice. After all, you would require this information when completing your EC Sales List.

For your information, the abbreviation of EU and VAT stand for European Unions and Value Added Tax respectively.

Generally, how a VAT registered company works is discussed below.

UK VAT number

First of all, you may find your VAT registration number on your VAT registration certificate issued by HM Revenue and Customs (HMRC).
It is made up of 9 digits with two letters GB at the front of the nine digits i.e
GB 111 2222 33.

VAT return

Secondly, you must submit VAT returns with HMRC. This is to avoid your VAT registration number being rendered invalid or cancelled because of non-filings. If you require help with the preparation and filing of your quarterly VAT returns, our accountants will be more than happy to assist you.

Genuine VAT number

Another reason it’s important to check the EU VAT registration number is to ensure the VAT registration numbers are genuine. With this, you can avoid paying for VAT on your goods and services where you are not obliged to. Always remember that only VAT registered businesses are allowed to charge VAT to their customers.

For example, If you paid for VAT on purchases to suppliers that do not have valid VAT numbers you will not be able to reclaim that VAT amount in your VAT return. HM Revenue and Customs would not issue the refund. You lose out in this situation.

So It is important that you verify the VAT number before you either remove it from your sale invoice for EU Customers. Likewise, you also check your suppliers who claimed they are VAT registered before you pay them. Especially when the VAT amount involved is considerable. This is to avoid scamming. This practice also creates awareness and ensure everyone takes part to make sure VAT compliance function as it should be.

EU customers

UK VAT company registered do not normally charge VAT to customers from European Countries who can provide valid TVA or VAT numbers.

However, before you remove your VAT amount from your sales invoice, it is strongly recommended you verify the TVA or VAT numbers of your customers. Take note of the VAT number accordingly. You would need this information when completing your EC sales list too.

Invalid VAT registration numbers

In short, If the VAT or TVA numbers appeared to be incorrect, inform your customers or suppliers so they can contact their home country tax office or accountants to verify the situation.

Likewise, If your customers are highlighting to you that your VAT numbers are invalid, contact your accountants as soon as possible if you have one. Otherwise, you may contact HM Revenue and Customs VAT helpline for advice.

Sometimes, HMRC cancels VAT numbers of a company because they never receive a VAT return. Or Companies House has struck off your company. This could happen when you do not act on Companies House reminders to file your company accounts and confirmation statement.

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