As a VAT-registered business owner, you need to be aware that there is a good, and very bad way to approach your three-monthly business VAT return. The key to remaining stress free and avoiding ‘VAT sweats’ is to start with some simple VAT return best practice. Luckily we’re here to show you how…
VAT Return Ready
Getting thoroughly organised and approaching your business VAT return in the right way won’t just give you a hassle-free tax year, it could save your business money and ensure you avoid some costly mistakes along the way..
The advice Kim Redwood-Lee often gives to business clients is: “Adopt best pratice early when it comes to VAT returns. It’ll give you a clear month to consider cash flow and plan accordingly. That’s breathing space every business owner can benefit from having.”
Bad practice. Using junior or un-trained staff to collate VAT return info on the 6th of the month it needs to be submitted.
Best practice. Collating, and inputting no more than 7 days after period end directly into your cloud-based accounting software.
If you’ve already breached the VAT threshold and registered for VAT with HMRC, then you may have already enlisted the help of a bookkeeper or accountant, to keep you HMRC compliant and complete and submit your VAT returns for you.
True, you can take advantage of the plentiful guidance online – not least from HMRC themselves. They even have a handy reminder service that will email you when it’s time for your next VAT submission. And that may be just as well if you are going it alone.
You can make your submission online yourself via the HMRC website. But to really be prepared, and ace business VAT returns you’ll have to get your timings right and understand the accounting period for your business.
VAT Return – Basic Principles
The basic principle is that VAT runs in three-monthly periods, and VAT submissions always needs to be made a month and seven days after the end of the previous period.
So if your business’ accounting period runs across January, February and March, for example, then you would need to make a submission on May 7.
Fairly straightforward in itself. But, the question is whether you’ve fallen into the bad practice trap of leaving your record collecting until the last moment. Top of your ‘Do Not Do’ list must be: do not leave collating your business VAT return information until the sixth day of the month in question.
Those adhering to best practice – A.K.A smart owners of growing businesses across Essex, London and Hertfordshire who have decided to remove their VAT worries by handing it all over to their accountant to manage – will be well ahead of the game and collating their VAT return information in good time.
VAT Return – Data to Submit
There’s quite a lot of VAT data to get on top of and collate on the last day of the period, starting with your total sales and purchases. The invoices, bank statements, and receipts need to be reconciled, and entered into the software package you are using.
Also on the checklist of information you need to submit your business VAT return is the total amount of VAT owed, and the amount of VAT your can reclaim.
Smart VAT Return Planning
Feeling the prickly return of the ‘VAT Sweats’?. It’s likely you’ve reached the point where you could benefit from a business VAT return service, like the one provided by our Oscar Fairchild AAT qualified bookkeepers and accountants.
We help many businesses across Essex, Hertfordshire and London, and for each it’s an incredibly worthwhile investment. Take Pentir, a London-based executive recruitment, coaching and team development provider who have VAT return best practice in place thanks to Oscar Fairchild’s simple, systemised approach. Hear from the firm’s Head of Support, Maggi Warren in this recent success story >>
VAT Return – What You Can Claim
The added benefit of planning ahead and working with a professional AAT ccredited practice like our own, is that not only are submission headaches removed, but so too is the head-spinning anxiety of keeping accurate records to work out what you can claim.
It’s likely you already understand that VAT can be reclaimed from HMRC for legitimate business purchases and expenses. But without expert accounting help, do you know whether that includes your business’ cars or fuel, travel expenses or accommodation costs?
There are special rules to take into account, and even more so when it comes to partial VAT exemptions, and VAT relief on bad debts. By working with a bookkeeping and accountancy partner like Oscar Fairchild your house will be kept in order, as we file direct to HMRC on your behalf via the accounting software system you choose to work with.
Safeguarding you from any potential penalties associated with late VAT return filing or missing the deadline for full payment of VAT owed.
VAT Return and Cash Flow
Finally, we can’t forget the advantage early VAT return preparation gives in terms of cash flow.
True, you may fine the topics of VAT output tax and recovering input taxes may be rather dull. But, we’re confident that the prospect of having greater VAT cashflow and available working capital will capture your interest!
It’s an organised approach that makes it all possible.
About Oscar Fairchild:
Oscar Fairchild (incorporating Redwood Clarke since 01.09.18) is an Association of Accounting Technicians (AAT) qualified accountancy & bookkeeping practice with offices in The City of London and Billericay, Essex. Offering a wide range of services including Self-Assessment Services, Annual Returns, VAT Returns, Credit Control, Payroll, Auto Enrolment Pension and Management Account services to high growth businesses across London, Essex and Hertfordshire.