VAT

• VAT returns must be submitted no later than 7 days after month end
• Bad debt relief is available if debt is more than 6 months old from the due date of payment
• Bad debt claims must be made within 4 years of the time the debt became eligible for relief
• You get 2 months to complete the annual return and make the final balancing payment
• Main advantages of the cash accounting scheme is;

  • Output VAT does not have to be accounted for until payment is received
  • Automatic bad debt relief since no output VAT is payable if payment is not received
• Tax point is when goods are removed / delivered to customer
• Actual tax point occurs if payment is received before the basic tax point
• If invoice is issued before the basic tax point, this is the actual tax point
• If invoice is issued within 14 days after the basic tax point, the actual tax point is the date of the invoice
• The value of supply of a gift of business assets is the VAT-exclusive amount that would be payable by the person making the supply at that time
• Input VAT can be recovered on gods supplied up to 4 years befoore registration
• Input VAT can be recovered on services supplied up to 6 months before registration
• If taxable turnover in prior period exceeds VAT threshold, person has 30 days of the end of the month to notify HMRC
• VAT registration takes effect from the first day after the end of the month where notification should've taken place
• Payments on account of VAT must be made for each quarter if VAT liability exceeds £2.3mn