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.

Keep digital VAT records

VAT registered companies and businesses with sales of more than £85,000 must sign up and follow the Making Tax Digital (MTD) rules for VAT. You must keep digital VAT records afterwards.

VAT companies and businesses with sales less than £85,000 per year can sign up voluntarily. By 1 April 2022, It is compulsory for all VAT registered companies and businesses to enrol for the Making Tax Digital scheme.

VAT records to keep

Here are a list of digital VAT records you must keep under the MTD rules.

Your business details

For your business, you must keep your business name, address and VAT registration number.

VAT accounting scheme

You must have a record of any VAT accounting scheme you use. For example, the margin scheme, annual accounting scheme, cash accounting scheme and/or flat rate scheme.

Your sales records

The VAT on everything you sell, lease, transfer or hire out. In other words, the supplies you made.

Your purchases records

The VAT on goods and services you receive. For instance, everything you buy, lease, rent or hire. Put it simply, the supplies you received.

Adjustments on VAT returns

If you are or have made an adjustment to your VAT return, you must keep a detailed record of the adjustment.

The tax point

Your tax point can vary depending on the goods and services you buy and sell. The tax point is also known as the time of supply. Read more about the time of supply here.

Your VAT rate

The current standard VAT rate is 20%. some businesses charge different VAT rate on their goods and services. For example, businesses that sell baby clothing and footwear charge zero per cent on VAT.

Other transactions for VAT

  • reverse charge transactions – where you record the VAT on both the sale price and the purchase price of goods and services you buy
  • your total daily gross takings if you use a retail scheme
  • items you can reclaim VAT on if you use the Flat Rate Scheme
  • your total sales, and the VAT on those sales, if you trade in gold and use the Gold Accounting Scheme

Companies House filings

Besides, complying and maintaining good digital VAT 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.

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