18 Apr
VAT Schemes
VAT SCHEME’s
You can join a VAT scheme if your business is registered for VAT, read our article to see how various schemes work and can be used by you.
Flat rate scheme
HMRC collects a fixed rate of VAT from you which is determined by the industry you are in. This allows businesses to keep the difference between the amounts paid to HMRC and the amount of VAT charged to the customers. You are able to claim standard VAT on certain capital assets over £ 2000. Your percentage is fixed and not dependent on your industry if you are a Limited Cost Business. You can see Flat Rate Percentages here.
Capital Good scheme
If you purchase or make an expensive capital asset, or already have one when you register for VAT the scheme allows you to spread the initial VAT claimed over a number of years. You can claim more if the proportion of taxable supplies increases and vice versa.
Annual scheme
You make one advance VAT payment towards your VAT bill rather than 4 quarterly payments, based on an estimate from last year and set-off any difference for more VAT required to be paid or apply for VAT refund when you submit your VAT return at VAT year end.
Margin scheme
This scheme relates to the purchase and sale of items such as antiques, second-hand goods, work of arts and any other collector`s items. The scheme taxes the difference between what you paid for an item and sold it for, rather than the full selling price. You pay VAT at 16.67% (one-sixth) of the difference.
Retail schemes
Point of sale scheme
Can be used if you identify the VAT rate for goods sold at the time of sale. Add all sales and divide by 6 (20/120) for standard or 21 (5/105) in case of 5% rated goods.
Apportionment scheme
Used when someone buys good only for resale. You cannot use apportionment for services or goods that you`ve grown yourself.
Direct calculation scheme
Can be used when you make a portion of your total sales from items that have a different VAT percentage and an only minority at a different VAT percentage. `
Clear House Accountants are specialist Accountants in London and VAT specialists. We work with clients helping them navigate around complicated VAT rules in the UK. Using SMART VAT planning schemes, we can help you save money and tax.
Author Bio
Jibran Qureshi FCCA is the Managing Director of Clear House Accountants, and has over 10 years of experience in practice and across multiple industries. Jibran’s educational background includes a Master’s in Financial Strategy from Oxford University and an Executive MBA from Hult International Business School. His experience in Financial Strategy, Tax Planning, Operational Consultancy and Performance Reporting guide his cognizant approach to leading Clear House and its clients to the future. It was this dexterity that led him to be Enterprise Nation’s Top 50 Advisors.
Jibran is fueled by his passion for helping businesses. He unequivocally believes that as business advisors and accountants for our clients, it is our responsibility to work with them as business partners. As specialists, it is our duty to help our clients navigate through the complexities of constant change and the implications that come with it.
Over the past decade, innovative disruptions have changed the way businesses work, everything from cloud software, innovative business models, to AI and machine learning, have impacted how businesses operate, grow, and expand.
Jibran recognized the need to manage these disruptions sustainably, early on and shaped Clear House Accountants to not just be compliance specialists, but advisors who help build complex ecosystems around cloud accounting software, provide advice on funding support, help manage innovative tax schemes, set up and implement complex strategic plans, and much more. So, his clients can thrive, not just survive.
Jibran developed his prime role as the Managing Director to build Clear House’s capabilities so it can add value for their clients. He is of firm belief that this can be done through consistent high-level training, building the right tools, and creating roadmaps to help businesses cope with prospective disruptions. He envisages that every client that comes on board, is provided maximum value through onboarding, ongoing services and the right mix of tools to help them become the best in the world.