Value Added Tax, to give VAT its full name, is an indirect tax, charged on the price of a product or service as it passes through its production, distribution or sale to the ultimate customer. Introduced in 1973, it provides HM Treasury with around 33% of its annual income.
VAT is charged on most good and services provided by registered businesses, although the rate charged may vary. As an indirect tax, the person who pays the tax to HMRC is not the consumer, but the supplier.
All businesses whose turnover exceeds the threshold must register for VAT, although it is possible to register before this point. Careful records should be kept both before and after registration to ensure that the need for registration isn’t missed, and from there that the usually quarterly Return submissions can be justified.
Once registered, a business must charge VAT at the appropriate rate on all of its sales, unless they are exempt supplies. Some goods and services may be changed at lower rates, known as either reduced or zero rates. The amounts charged to its customers by the business can be offset against VAT amount they themselves pay out, reducing the amount that is paid over to HMRC.
Non-payment of VAT is a criminal offence, whilst most other tax related fraud is classified as a civil issue. VAT evasion, avoidance and fraud costs HM Treasury billions of pounds every year.
We have not intended to explain VAT in full in this section of our Info Centre; it simply isn’t large enough! What we have tried to do is cover the latest news areas, and to answer the most popular questions that we’re asked. We’ll continue to add more content, but please contact us if you have specific questions.
Can I control my VAT Return date?
We’re often asked if it’s possible to control the VAT Return date. Contrary to popular opinion, the answer is a resounding yes! And it’s quite an easy process too.
NEW VAT Penalty Framework
A new VAT Penalty Point system was delayed because of the pandemic, and will now take effect for VAT periods starting after 1st January 2023.
Tax Rates 2023/24
We’ve listed below the latest tax rates and allowances as announced in the 2023 Spring Budget, or before.
EU Digitalisation and ViDA is coming!
Europe is set to digitalise its VAT payment system in a bid to improve revenue collection and reduce fraud. The changes will affect businesses operating in Europe, including those in the UK.
Self Serve Time to Pay launched for VAT
Sometimes the cash simply isn’t in the bank when it comes time to make your VAT payment.
You can now apply online for a time to pay arrangement; here are the details.
Related News Items
Why not take a look at these sections too, as there is some overlap between our categories and we’d hate you to miss out!
Tax – HMRC
Each of our clients receives regular updates that keep them aware of changes and suggestions on a wide range of subjects; if you’d like to receive those too, just click on the button below, add your details and we’ll do the rest!
Can I just say we are so pleased that we have moved to Baranov Associates. As we discussed when you visited, we had to find a way to take the stress out of all of the financials and you’re doing that for us! We can see how to use Xero more efficiently and so with us being as on top of it as we can be and with you and Liz we feel a lot more confident about our business being in good shape.
Mrs S James, Sandbanks Capital Partners Limited
Would it help to chat?
If it would help to talk to us, just enter your details below and we’ll be in touch as soon as we can.
"*" indicates required fields