Top ten tips on VAT

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Top ten tips on VAT

  1. 1. VAT Hot Topics 1 October 2009 The VAT Consultancy Laurel House Station Approach Alresford SO24 9JH Tel: 01962 735350 Fax: 01962 735352 www.thevatconsultancy.com
  2. 2. Agenda <ul><li>1) VAT Liability </li></ul><ul><li>2) VAT Registration </li></ul><ul><li>3) Flat Rate Scheme </li></ul><ul><li>4) Cash Accounting / Annual Accounting </li></ul><ul><li>5) Prompt Payment Discounts </li></ul><ul><li>6) Bad Debt Relief </li></ul><ul><li>7) New Voluntary Disclosure Rules </li></ul><ul><li>8) Penalties </li></ul><ul><li>9) Complex Areas </li></ul><ul><li>10) Future VAT Rate Change </li></ul>
  3. 3. VAT Liability <ul><li>Exempt </li></ul><ul><li>Taxable </li></ul><ul><li>Outside the scope </li></ul>Standard Rate Reduced Rate Zero Rate
  4. 4. VAT Registration <ul><li>Compulsory </li></ul><ul><li>Voluntary </li></ul>Look back test Look forward test Intending trader Trading under the limit VAT Threshold April 2009 = £68,000
  5. 5. Flat Rate Scheme <ul><li>Entry level for taxable turnover is less than £150,000. </li></ul><ul><li>Other income level ignored. </li></ul><ul><li>The exit level is £225,000. </li></ul><ul><li>Notice 733. </li></ul><ul><li>Benefits - a flat rate payment . </li></ul>
  6. 6. Cash Accounting/ Annual Accounting <ul><li>Cash Accounting </li></ul><ul><li>Income not exceeding £1.35 million in the past 12 months to join. </li></ul><ul><li>Exit level of £1.65 million. </li></ul><ul><li>Notice 731. </li></ul><ul><li>Benefits – built in bad debt relief. </li></ul>
  7. 7. Cash Accounting/ Annual Accounting <ul><li>Annual Accounting scheme </li></ul><ul><li>Same entry level applies as cash accounting and exit level. </li></ul><ul><li>Notice 732. </li></ul><ul><li>Benefits - one VAT return and payments are made on account by agreement with Revenue & Customs or by 9 equal monthly instalments with a final balance in payment. </li></ul>
  8. 8. Early Settlement Discounts <ul><li>VAT valuation rules sometimes complex </li></ul><ul><li>Value for prompt payment/early settlement discount as if discount taken </li></ul><ul><li>Therefore lower VAT even if payment NOT early </li></ul>
  9. 9. Bad Debt Relief <ul><li>Unpaid sales invoice that is more than 6 months old. </li></ul><ul><li>VAT Notice 700/18. </li></ul><ul><li>Writing Off Procedure. </li></ul><ul><li>Principles apply to unpaid purchases too! </li></ul>
  10. 10. Voluntary Disclosures <ul><li>Increased from £2,000 to £50,000, but greater of £10,000 or 1% of VAT ‘turnover’ < £5M. </li></ul><ul><li>Period of discovery not error. </li></ul><ul><li>Notification to HMRC -> penalty regime </li></ul>
  11. 11. Penalties <ul><li>Effective: VAT Returns to be submitted on or after 1 st April 2009. </li></ul><ul><li>How is the penalty charge calculated? </li></ul><ul><li>Percentage of the extra tax due. </li></ul><ul><li>Subject to behaviour that gave rise to the error. </li></ul><ul><li>Lower the tax ‘at risk’ and less serious the behaviour, the smaller the penalty. </li></ul>
  12. 12. Anti-Forestalling <ul><li>Rate change from 15% to 17% 1 Jan 2010 </li></ul><ul><li>Potential savings to be made but be wary of rules </li></ul><ul><li>See video stream on www.thevatconsultancy.com </li></ul>
  13. 13. Complex Areas <ul><li>Property – varies between developer and owner; commercial and residential etc </li></ul><ul><li>Place of supply of services – very different to rules for goods. Varies depending on TYPE of supply. Changes 1 Jan 2010 and 1 Jan 2011 </li></ul>
  14. 14. ANY QUESTIONS? <ul><li>Contact any of us on: </li></ul><ul><li>01962 735350 </li></ul><ul><li>www.thevatconsultancy.com </li></ul>

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