- Nasa Accountants follow the same process for VAT returns as other returns
- We'll always confirm your accounting software is up to date before we draft a provisional return and send this for your approval. Once approved, we'll submit the return & provide you with the payment details. We cannot submit the VAT return without your approval
💡It is the responsibility of a company’s directors to ensure the return is prepared in line with official guidance. Whilst NASA carries out checks before sending the provisional returns, we cannot guarantee the complete accuracy of them, therefore we advise clients to read our guidance, HMRC’s official guidance (found here https://www.gov.uk/guidance/how-to-fill-in-and-submit-your-vat-return-vat-notice-70012) and ask that you raise any concerns with your client manager before approving returns for submission.
Standard Rate Scheme:
Under this scheme you charge 20% VAT on top of your supplies to customers and reclaim any VAT paid on business purchases* 💡The net of these two figures is then paid to HMRC.
*unless subject to VAT block from HMRC which your client manager will be able to assist with
- When raising invoices within the accounting software you will need to select the VAT rate for your supplies. The software will automatically include the invoice as appropriate on the relevant return.
- When reclaiming VAT on business expenditure, the software will often assume the VAT rate based on its category. You should check this against the VAT shown on the invoice or receipt to ensure you only claim what you are allowed to.
You should always follow the VAT treatment of the invoices and receipt that you have been given. eg, if it states you paid 20% always ensure this is reflected on the transaction. If you do not have a receipt that shows VAT was paid, we advise not to reclaim VAT on that expense. HMRC can investigate and should you not be able to provide proof of purchase with VAT details, they may remove that transaction from your return. Penalties can also apply for inaccurate VAT returns.
Flat Rate VAT Scheme (FRS)
Under this scheme you'd still generally charge your customer 20% VAT on top of your supplies, like with the standard scheme. Unlike the standard scheme however, you cannot reclaim VAT on business expenses.
Under FRS you'd pay a percentage of your total billing to HMRC. This means less than the 20% VAT charged is due to HMRC, meaning you make a small profit on each invoice where VAT is charged.
- There are different flat rates available that determine how much of your total billing is passed on to HMRC. The most common of these is Limited Cost Trader where 16.5% of your total billing is due to HMRC (reduced to 15.5% for the first year of registration). Please speak to your client manager if you want to discuss the rates available to you.
- Whilst you cannot reclaim VAT on business expenditure, you may be able reclaim VAT on capital expenditure items costing over £2,000 in total.
Please note, this guidance is only intended to be an introduction to the VAT rules, which can be very complex, and so if you have any concerns (e.g. when working with an overseas client, ceasing trade) please speak to your client manager who will be happy to advise.