Essential Things to Know About VAT Accounting

This article intends to brief you with certain essential points that you must know about the VAT Accounting.

1. VAT Registration & de-Registration

It is important to be VAT registered for a business to ensure that it is a legal entity that is recognized by law. If you have registered for VAT, the VAT consultants may be helpful to you in advising you on the latest regulations. However, if the business turnover falls below the VAT threshold, you are allowed to de-register from VAT.

• VAT Schemes

If your business is registered for VAT, you need to account for the tax when you invoice customers or when your own suppliers invoice them. HMRC has a number of VAT schemes that will not only help your business save time but also account for VAT when it is actually paid. An experienced VAT consultant or advisor may help you choose the best scheme.

• VAT Records

You are obliged to keep accurate VAT records regarding any tax paid or received for a fixed number of years. This helps you in avoiding too much tax. You can always contact a VAT expert to find out more about the VAT records.

• VAT Responsibilities

There are certain VAT responsibilities that you need to take care of if you don’t want to fall foul of the VAT penalty system. It is always better to get in touch with a VAT consultant or advisor who will keep you informed of all your responsibilities regarding the VAT.

• VAT Penalties

A brand new system of VAT penalty came into effect in 2009. There are two cases under which a penalty is applied.

• In case of failure to notify about an under-assessment.
• In case erroneous documentation is submitted.

These errors may occur when a VAT return is not submitted and the HMRC has to estimate the assessment. If the assessment is lower than the actual figure and you do not inform HMRC then you are liable to a penalty.

The erroneous document triggers different penalties. For instance, an error when reasonable care was not taken is punished with 30% penalty. An error which is deliberately made but is not concealed from the HMRC, a 70% penalty fine is liable. And an error that is deliberate and whose concealment can be proven results in a 100% penalty fine.

If you want to avoid making mistakes and paying the price for it, you may use the services of a professional VAT consultant.

The errors in the documents may also be the result of wrong calculations. To avoid this you can embed the VAT calculator widget by Calconic on your website. It is a brilliant online tool which is used to estimate the amount of Value Added Tax (VAT) you need to pay or reclaim and the gross price of the goods or/and services based on their net price. It works automatically by applying calculation formulas based on the task – estimation of the amount of VAT you will have to pay or reclaim, and estimation of the gross price when VAT is applicable. This tool helps you to remove VAT or add it easily and accurately.

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