If your VATable turnover is under 1.35 million and you are not using cash accounting, now would be a good time to switch. If you sell goods on credit and you are usually owed more than you owe, cash accounting would probably reduce at least the first payment you make when you join the scheme. Essentially, you only pay VAT when it is collected from customers. Outputs and inputs are based on monies received and paid, rather than amounts invoiced.
If you have small amounts of input tax to reclaim each month, you may be able to increase your retained profits using the Flat Rate Scheme, providing your turnover is under 150,000 per month. To see if the scheme would be beneficial, you must compare the cost of VAT payable under the existing method with that on the Flat Rate Scheme, as each business sector suffers a different rate of VAT.
You can also claim bad debt relief, even if you don't qualify for a special scheme. To qualify as bad debt, the debt has to be over six months old. You can reclaim the output tax you will have paid. You should however repay any input tax you claim to your suppliers if you have unpaid invoices.
If you file your VAT return online, you will have an extra seven days and the payment will not appear on your bank account for a further three days, providing you pay by direct debit. Tax Payment on Account Considerations
In January and July each year, self-employed people will be used to making payments on account of tax liabilities. For the accounting year ending in the tax year to 5 April 2008 together with half the anticipated liability for the accounting year ending in the tax year to 5 April 2009, you will pay any balancing amount of tax in January 2009.
It is assumed by the payment on account that profits for the accounting year 2008/09 are the same as those for 2007/2008.Payments on the account can be reduced if you anticipate a fall in profits as a result of the current economic climate, which can be discussed with your usual member of our Tax Team. However, reductions in payments should not be carried out if you do not anticipate a reduction in profits, as it may result in punitive interest charges and the possibility of penalties.
If you are having difficulty meeting any VAT or tax payments please contact the Revenue debt helpline which has been recently established to help those with cash flow problems. One of our clients has recently used this and found the experience to be a positive one. The number to telephone is 0845 302 1435.
VAT Changes Regarding the Chancellor's Pre Budget announcements, it was mentioned in November's Financial Monitor that when goods or services had been supplied after but paid for before 1 December 2008 then the VAT charge can be reduced from 17.5% to 15%. If suppliers wish to give this VAT reduction, although they are not required to, they must issue a credit note by 14 January 2009, otherwise they must cintinue to use the 17.5% VAT rate.
If you have small amounts of input tax to reclaim each month, you may be able to increase your retained profits using the Flat Rate Scheme, providing your turnover is under 150,000 per month. To see if the scheme would be beneficial, you must compare the cost of VAT payable under the existing method with that on the Flat Rate Scheme, as each business sector suffers a different rate of VAT.
You can also claim bad debt relief, even if you don't qualify for a special scheme. To qualify as bad debt, the debt has to be over six months old. You can reclaim the output tax you will have paid. You should however repay any input tax you claim to your suppliers if you have unpaid invoices.
If you file your VAT return online, you will have an extra seven days and the payment will not appear on your bank account for a further three days, providing you pay by direct debit. Tax Payment on Account Considerations
In January and July each year, self-employed people will be used to making payments on account of tax liabilities. For the accounting year ending in the tax year to 5 April 2008 together with half the anticipated liability for the accounting year ending in the tax year to 5 April 2009, you will pay any balancing amount of tax in January 2009.
It is assumed by the payment on account that profits for the accounting year 2008/09 are the same as those for 2007/2008.Payments on the account can be reduced if you anticipate a fall in profits as a result of the current economic climate, which can be discussed with your usual member of our Tax Team. However, reductions in payments should not be carried out if you do not anticipate a reduction in profits, as it may result in punitive interest charges and the possibility of penalties.
If you are having difficulty meeting any VAT or tax payments please contact the Revenue debt helpline which has been recently established to help those with cash flow problems. One of our clients has recently used this and found the experience to be a positive one. The number to telephone is 0845 302 1435.
VAT Changes Regarding the Chancellor's Pre Budget announcements, it was mentioned in November's Financial Monitor that when goods or services had been supplied after but paid for before 1 December 2008 then the VAT charge can be reduced from 17.5% to 15%. If suppliers wish to give this VAT reduction, although they are not required to, they must issue a credit note by 14 January 2009, otherwise they must cintinue to use the 17.5% VAT rate.
About the Author:
Andrew Sutton has written many articles for accountant sheffield. Based in the UK, he has been advising clients and people with their accounts for a long time.
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