V is for VATThe A to Z of Profit Growth – V is for VAT

 

It’s time for the next A to Z of Profit Growth… This week V is for VAT!

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KMA The A to Z of Profit Growth – V is for VAT

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Hi, Kim, here with your next profit growth advice. V is for V-A-T or VAT otherwise known. And today I’ll be delving into the different VAT schemes. First of all, are you even aware that there’s more than one VAT scheme and that there are different ways that you can account for VAT? The invoice scheme is the traditional method for accounting for VAT. Simply add up the VAT on your sales invoices, knock off the VAT on the purchases, and pay over the difference to HMRC.

Sounds simple, but you could be paying too much if you don’t know for sure what you can reclaim VAT on. Many businesses don’t know about the cash scheme and therefore could have a worse cash flow as a result. In short, VAT on sales invoices only becomes payable when the invoice is paid by the customer and not when it’s raised.

Alternatively, the flat rate scheme could be the best scheme for your business by reducing your VAT bill and saving you time and stress preparing the VAT return. You collect 20% VAT on your sales invoices, but then you pay a lower percentage. The percentage varies depending on your industry and the nature of your purchases. The current flat rate for accountants, for example, is 14 and a half percent. So, that’s much lower than the 20% you collect. Picking the right VAT scheme could be a huge source of savings for some, contributing to your bottom line.
Click the link below to calculate your potential savings.

 

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