New to VAT - Please advise

[Bateman]

Hi,

I recently got my Ltd company VAT regd under FRS. I've gone through IT contractor guide to Flat Rate VAT :: Contractor UK but I have few basic doubts on VAT.

1. Can anyone please provide me any guide/link on VAT basics and details
2. What are the VAT exemptions I'm eligible for? like If I buy a laptop or any equipment for business, will I get VAT exemption?
3. I pay to my accountant with VAT%. Should I pay VAT or will I get exemption there as well where I get professional services?
4. is there any limitation on how long (minimum period) do I need to run my company to be fully VAT compliant?

Thanks

[TheDandy]

Hi,

I recently got my Ltd company VAT regd under FRS. I've gone through IT contractor guide to Flat Rate VAT :: Contractor UK but I have few basic doubts on VAT.

1. Can anyone please provide me any guide/link on VAT basics and details
2. What are the VAT exemptions I'm eligible for? like If I buy a laptop or any equipment for business, will I get VAT exemption?
3. I pay to my accountant with VAT%. Should I pay VAT or will I get exemption there as well where I get professional services?
4. is there any limitation on how long (minimum period) do I need to run my company to be fully VAT compliant?

Thanks

Can't your accountant answer it. You are paying for one according to point 3.

[northernladuk]

Can't your accountant answer it. You are paying for one according to point 3.

I would go with this I am afraid. If you can't find this information yourself either in the links to the right (there is one called VAT/FRS VAT), on google or using the search method as described in the link below I think you really need to start asking the professional you are paying for. We can answer those pretty easily but I don't think feeding you lines is what you need. I would say you need to sit down with him and go through your situation from scratch so you fully understand it.

Search method is below. Loads of threads on FRS VAT and exceptions....

http://forums.contractoruk.com/welco...uk-forums.html

[TheCyclingProgrammer]

Why did you register for VAT and the FRS before have even a basic grasp of how it works? Except for single purchases of capital items over £2k, you can't reclaim the VAT on anything (there may be some preregistration expenditure you can claim, talk to your accountant).

Instead of recovering the input VAT on each supply, you are pay HMRC a lower percentage of your gross as output VAT and get to keep the difference which should cover your unclaimed input VAT and any surplus as profit.

[JB3000]

Hi,

I recently got my Ltd company VAT regd under FRS. I've gone through IT contractor guide to Flat Rate VAT :: Contractor UK but I have few basic doubts on VAT.

1. Can anyone please provide me any guide/link on VAT basics and details
2. What are the VAT exemptions I'm eligible for? like If I buy a laptop or any equipment for business, will I get VAT exemption?
3. I pay to my accountant with VAT%. Should I pay VAT or will I get exemption there as well where I get professional services?
4. is there any limitation on how long (minimum period) do I need to run my company to be fully VAT compliant?

Thanks

Here is a link:

HM Revenue & Customs: VAT

VAT is generally quite simple and straight forward.

You will need to do a VAT return every 3 months.

You will simply need to add up the money you receive from your agency and multiple it by your flat rate scheme % (if you work in project management it will be 13% for the first year, however if you work in IT consultancy it will be 13.5% for the first year).

For example, assuming you work in IT, your VAT quarter is July 2014 - September 2014 and assuming you receive £36,000 from your agency (i.e. £30,000 + £6,000 of VAT), you would need to pay £36,000 x 13.5% = £4,860 by 07/11/2014 (i.e. 1 month a 7 days after the end of your VAT quarter).

As you can see, you have made a profit from being on the flat rate scheme, i.e. you received £6,000 of VAT but are only paying £4,860 to HMRC, i.e. a £6,000 - £4,860 = £1,140 profit.

If you purchase some capital goods on a single invoice (i.e. computer, phone and printer) and that single invoice comes to more than £2,000 including VAT you can claim the VAT back. For example, if the single invoice is for £2,400 (i.e. £2000 + £400 of VAT) you would be able to claim £400 back. If you buy the capital assets during August 2014, this will mean that your fictional VAT liability would be £4,860 - £400 = £4,460.

If your accountant charges you £120 (i.e. £100 + £20 of VAT) you will need to pay your accountant £120. There is no exemption for services.

There is no time limit. Don't worry or try to over complicate things, please.

[stek]

Opps, at Cricket, pissed (ish) got confused....

[stek]

Well thanks again everyone for the links, reading on, another thing I didn't know (well I knew, but kinda pushed it aside cos it wouldn't effect me), there's a £150,000 limit on t/o for the FRS scheme, need to check back but I think I'll break that this year, so FRS might not be an issue now.

Edited - I posted this on wrong thread cos I'm at Old T and had a few but it's still good advice even though I ballsed up....

[JB3000]

Well thanks again everyone for the links, reading on, another thing I didn't know (well I knew, but kinda pushed it aside cos it wouldn't effect me), there's a £150,000 limit on t/o for the FRS scheme, need to check back but I think I'll break that this year, so FRS might not be an issue now.

Before registering for the flat rate scheme you should have a look at what you think your turnover for the next 12 months will be. If you think your turnover will be greater than £150,000 you should not register for the flat rate scheme.

However if you think you turnover will be less than £150,000 in the next 12 months you can register for the flat rate scheme.

Once on the flat rate scheme for VAT, on each anniversary, you should take a look at your turnover going back the last 12 months. If this is greater than £191K (i.e. £230K gross, including VAT) you should deregister from the flat rate scheme (unless you can argue that your turnover increased as a result of an exceptional one off reason). If your turnover did go over £191k in the previous 12 months (measured from the anniversary of joining the scheme) HMRC is likely to contact you and deregister you from the flat rate scheme automatically. Even if HMRC does not contact you, you should contact HMRC and let them know that you will be preparing your VAT return on a standard basis as you have breached the £230k gross threshold.

[stek]

Before registering for the flat rate scheme you should have a look at what you think your turnover for the next 12 months will be. If you think your turnover will be greater than £150,000 you should not register for the flat rate scheme.

However if you think you turnover will be less than £150,000 in the next 12 months you can register for the flat rate scheme.

Once on the flat rate scheme for VAT, on each anniversary, you should take a look at your turnover going back the last 12 months. If this is greater than £191K (i.e. £230K gross, including VAT) you should deregister from the flat rate scheme (unless you can argue that your turnover increased as a result of an exceptional one off reason). If your turnover did go over £191k in the previous 12 months (measured from the anniversary of joining the scheme) HMRC is likely to contact you and deregister you from the flat rate scheme automatically. Even if HMRC does not contact you, you should contact HMRC and let them know that you will be preparing your VAT return on a standard basis as you have breached the £230k gross threshold.

Cheers for that, I won't be doing 191k so thats ok, seems I have a choice tho if my plan B pays off, might suit to de-reg if I've more costs but need to analyse I suppose. When sober...