VAT accounts must by law be accurately maintained to ensure the correct amount of tax is paid to the HMRC. They can demand to inspect your records at any time. Your VAT bill is calculated by ascertaining the VAT you have collected via sales &/or services from your business & deducting any VAT you have paid in the course of running your business.
Quarterly VAT Returns are due one month & seven days after the end of the quarter. Penalties can quickly add up if you are late with your return or your payment.
HMRC will record a 'default' if you either fail to make your return or you fail to make full payment by the deadline. This may place you in a Surcharge Period, where dependant on your business's turnover, charges will start to apply.
For full details on penalties & surcharges, click here to visit the HMRC site.
Making Tax Digital
Making Tax Digital is the transformation from manual to electronic VAT returns. It came into effect from April 2019 for all businesses that are VAT registered & have a turnover above the VAT threshold (£85,000). Some businesses are exempt, but the vast majority must comply and this means using HMRC recognised software to complete & submit your return.
HMRC are currently looking to roll out MTD to roll out Making Tax Digital to companies below the £85,000 threshold in 2021.
VAT recording & reconciliations
VAT Return preparation & submission (cash and standard VAT Returns only but including EU transactions)