Account engagement letter- Filing vs Prepare VAT

[craig1]

Thanks a lot craig.

NP.

One other thing that occurred to me this morning was your statement: "I don’t understand whether I need to file one or not. I am not taking salary until next April."

If you've hired an accountant, got a VAT number and so on, I assume you've started trading, maybe issuing invoices or spending money. If you're issuing invoices or spending money, you'll most likely have VAT liabilities or can reclaim VAT. It's irrelevant when you take money out of the company, it's when it comes in that's important. If you've started business and have bought some assets, e.g. new laptop, etc, then that's VAT money you can reclaim.

You also need to check what VAT regime you are working under. Flat rate, cash accounting or "normal" VAT. Again, either your accountant or the VAT people should be able to tell you. That's a very important issue that could get you in a bit of trouble if you get it wrong.

Most of the issues here are why I do all my own books and returns but get them professionally checked at year end to make sure I'm doing nothing stupid.

[7of9]

NP.

One other thing that occurred to me this morning was your statement: "I don’t understand whether I need to file one or not. I am not taking salary until next April."

If you've hired an accountant, got a VAT number and so on, I assume you've started trading, maybe issuing invoices or spending money. If you're issuing invoices or spending money, you'll most likely have VAT liabilities or can reclaim VAT. It's irrelevant when you take money out of the company, it's when it comes in that's important. If you've started business and have bought some assets, e.g. new laptop, etc, then that's VAT money you can reclaim.

You also need to check what VAT regime you are working under. Flat rate, cash accounting or "normal" VAT. Again, either your accountant or the VAT people should be able to tell you. That's a very important issue that could get you in a bit of trouble if you get it wrong.

Most of the issues here are why I do all my own books and returns but get them professionally checked at year end to make sure I'm doing nothing stupid.

Thank you for the help Craig. I am under the flat rate scheme.

And Yes, I have been issuing invoices to my agency. So I don’t need to file a NIL return yet.

Good news is my accountant has decided to file VAT/PAYE for me after I complainted. I still need to make the payment to HMRC online but they will calculate the amount for each quarter when they do my quarterly report. =)

[SueEllen]

Thank you for the help Craig. I am under the flat rate scheme.

And Yes, I have been issuing invoices to my agency. So I don’t need to file a NIL return yet.

Good news is my accountant has decided to file VAT/PAYE for me after I complainted. I still need to make the payment to HMRC online but they will calculate the amount for each quarter when they do my quarterly report. =)

If you did the calculation yourself you could set up a direct debit to come out 7 working days after the quarter end for the money.

[Clare@InTouch]

Thanks for the reply Clare. Actually one of my friends' accountant does his PAYE/NIC for him. You need make payment for VAT as well. If you use this argument, then in theory everyone has to do their VAT return themselves as well.

Sorry, my reply obviously wasn't clear - the filing of the return and the subsequent payment are separate processes, and it's perfectly fine for one person to file the return and a different person to them make payment. We file a lot of returns for clients, and they then do a bank transfer or set up a DD themselves.

The same goes for PAYE - we file year end returns, and we can file NIL returns too, but again it's the client that makes the actual physical payments.

It wouldn't be common for an accountant to make the payments, as to do so they would need access to your bank account. Since the managed service company legislation was introduced a few years back most accountants wouldn't want to have access to your business bank accounts (apart from the ability to view transactions).

[SallyPlanIT]

One thing to note if you intend to do online transactions with HMRC such as VAT filing: if you don't have a Government Gateway username/password, get one sorted now! It'll take 1-3 weeks to get it done depending on the turnaround speed this month and they'll be very unsympathetic if you go to file at the end of a quarter and can't do so.

Edit: A business one, not a personal one!

You can register on the Government Gateway as an "organisation" and file a VAT return on the same day. This is one of the few services that doesn't require an activation code.

[craig1]

You can register on the Government Gateway as an "organisation" and file a VAT return on the same day. This is one of the few services that doesn't require an activation code.

Must have changed recently then because I had to get an activation code when I moved from paper to online returns.

[SallyPlanIT]

Must have changed recently then because I had to get an activation code when I moved from paper to online returns.

It did, quite recently, which is good news as many people leave it until the last moment!

[7of9]

Sorry, my reply obviously wasn't clear - the filing of the return and the subsequent payment are separate processes, and it's perfectly fine for one person to file the return and a different person to them make payment. We file a lot of returns for clients, and they then do a bank transfer or set up a DD themselves.

The same goes for PAYE - we file year end returns, and we can file NIL returns too, but again it's the client that makes the actual physical payments.

It wouldn't be common for an accountant to make the payments, as to do so they would need access to your bank account. Since the managed service company legislation was introduced a few years back most accountants wouldn't want to have access to your business bank accounts (apart from the ability to view transactions).

Hi Clare, thanks for clarifying things. My accountant has offered to file my VAT and PAYE returns. =) I only need to make the payments. This was what he promised at the beginning anyway.

[7of9]

Must have changed recently then because I had to get an activation code when I moved from paper to online returns.

My accountant registered me with HMRC recently. 'Submit a VAT return' service doesnt require ACTIVATION CODE. But 'Change registration details' still requires the code. =)