Value Added Tax (VAT) is a tax on goods and services in the UK. VAT-registered businesses are required to charge VAT on their sales and pay VAT on their purchases. In this blog post, we’ll break down the key dates and deadlines you need to know to stay on top of your UK VAT obligations.
VAT Registration
If your business has a taxable turnover of over £85,000 in a 12-month period, you must register for VAT. You can register online through the HMRC website.
VAT Return Deadlines
VAT returns are usually submitted on a quarterly basis, although some businesses may be required to submit them more frequently. The deadline for submitting your VAT return and paying any VAT due is one calendar month and seven days after the end of the VAT return period. For example, if your VAT return period ends on March 31, the deadline for submitting your return and paying any VAT due is May 7.
VAT Payment Deadlines
If you pay by direct debit, the payment will be taken from your bank account three working days after the VAT return deadline. If you don’t pay by direct debit, the payment deadline is the same as the VAT return deadline.
Annual VAT Accounting Scheme
If your business has a turnover of less than £1.35 million, you can use the Annual VAT Accounting Scheme. This allows you to submit one VAT return per year, instead of quarterly. The deadline for submitting your annual VAT return and paying any VAT due is two calendar months and seven days after the end of the VAT accounting period.
VAT Flat Rate Scheme
If your business has a turnover of less than £150,000, you may be eligible to use the VAT Flat Rate Scheme. This simplifies the VAT process by allowing you to pay a fixed rate of VAT on your gross turnover.
The deadline for submitting your VAT return and paying any VAT due under the Flat Rate Scheme is the same as for other businesses.You can’t reclaim VAT when you’re using the Flat Rate Scheme, unless you buy a capital asset that cost over £2,000 including VAT – you can reclaim the VAT on that, but must pay standard VAT on that asset when you sell it on. The VAT Flat Rate Scheme is designed to save a small business time, rather than cash.
Late Filing and Payment Penalties
If you miss a VAT return deadline or don’t pay the VAT you owe on time, you may be subject to penalties and interest charges. The amount of the penalty depends on the amount of VAT owed and the length of time it remains unpaid.
In conclusion, understanding the key dates and deadlines for UK VAT obligations is crucial for any VAT-registered business. By staying on top of these deadlines, you can avoid penalties and ensure that you’re meeting your VAT obligations in a timely and efficient manner.