Introduction to VAT returns and how fiscal representatives can help
VAT returns in UK show the amount of VAT that your business has to pay to the tax authorities.
Usually a VAT return has to be submitted with the HMRC (HM revenue and customs) every three months which means a return needs to be filed four times every year. This period of three months is called the accounting period. UK VAT returns are a part and parcel of the financial routine of the business.
The things that a VAT return in UK records for every accounting period of three months are your total sales and purchase, the amount of VAT owed, the amount of VAT you can reclaim and the VAT refund due from HMRC.
Let’s go into the details of what can and cannot be reclaimed. Usually the VAT paid on goods and services purchased to be used in your business can be reclaimed. When the purchase is for personal use then one can reclaim the business proportion of the VAT. For example if your office takes 20 % of the space on the floor then you can reclaim 20 % of the VAT on the bills. Now let’s look at what cannot be reclaimed. Anything that’s meant only for private use cannot be reclaimed. Also, business entertainment costs cannot be reclaimed. Anything that counts as business assets transferred to you as a going concern can also not be reclaimed.
Completing a VAT return can be a daunting task therefore I advise you to hire a fiscal representative. A fiscal representative will tell you whether you would benefit from de registering and if not then which VAT schemes you are eligible for and what would be the right combination of schemes for you to opt for. Every scheme is different and a fiscal representative would educate you about the same. For example certain schemes help save tax and reduce the need for book keeping. A fiscal representative would help you prepare your VAT return and for that they’ll either use your bookkeeping records or take control of your record keeping in their hands. A representative would also make sure that you claim the highest amount of VAT possible and especially on controversial items such as the cost of running motors. A representative will also take care of your correspondence with HMRC and they can help because they know how the software which is required to file a return works because paper VAT returns are now pretty scarce.
I suggest you go for a fiscal representative also because late VAT registration and late returns lead to heavy penalties and high interest being charged. I would like to conclude by saying that It is important to have proper returns in place because a business cannot claim input VAT unless tax invoices are in order. Plus it is a necessary aspect of the tax process that you maintain proper records once the business is VAT registered. You can easily have everything in order when you hire a fiscal representative.