Steps to Pay VAT in UK

1. Steps to Pay VAT in UK Steps to Pay VAT in UK By: Km Benjamin

2. Before proceeding any further towards how to file “Online VAT return in UK” one must understand what VAT exactly is and how it is calculated. VAT or Value added tax is levied by the government on sales and purchases of an organization in business. In the UK the current VAT rate is 20%. This type of tax is either payable to the government or received back in accordance with the calculation on both ends. What is VAT? What is VAT?

3. VAT Payable VAT Payable If VAT Calculated on sales is greater than VAT on Purchases, Difference shall be payable by the company to the Government.

4. As a matter of fact, if VAT on purchases is greater than on sales, the government shall refund such difference of amount back to the company. VAT Refundable VAT Refundable

5. VAT Payable Calculation Following table shows VAT Payable or Refundable Calculations at 20%. Sales of goods 5000 GBP VAT on sales @ 20% 1000 GBP Purchase of Goods 4000 GBP VAT on Purchases @ 20% 800 GBP 1000 - 800 = 200 GBP Payable by Company VAT Payable = VAT on Sales – VAT on Purchases

6. VAT Refundable VAT Refundable Calculation Calculation Sales of goods 4000 GBP VAT on sales @ 20% 800 GBP Purchase of Goods 4500 GBP VAT on Purchases @ 20% 900 GBP 900 - 800 = 100 GBP Refundable to Company VAT Refundable = VAT on Purchases – VAT on Sales

7. • it is very much important to know how to file “Online VAT Return in UK” • You can either do this by submitting your return through HMRC’s free online service. Like the Tax department of any other country, HMRC is Her Majesty’s Revenue and Customs department. It works independently and it is held responsible for all kind of tax collection on behalf of the UK Government. Please note that the deadline for submission of VAT return is 1 calendar month and 7 days after an accounting retro.

8. Step 1 Step 1 Calculate your VAT as shown and elaborated in the above tables.

9. Step 2 Step 2 You need a VAT number and an online VAT account. Registration becomes mandatory if the business turn over is above 85000 GBP however you may still get registered.

10. Step 3 Step 3 • Fill in your form online, keep supportive documents along while reclaiming your VAT. You can do that by using commercial accounting software calculations like Xero or by HMRC’s free online service. • Please note VAT registered companies can only reclaim the VAT they have paid on expenditures. Entertainment expenses cannot be reclaimed in VAT Return. For registration of VAT and online submission please visit the UK government’s official website and search for business tax section. that supports VAT business purchases and

11. Benefits of VAT Benefits of VAT Registration Registration Every actually to assist the public at large. As it is said “legal way is the right way” registered as VAT filer can help your business grow more. It merely enhances the business credibility and strengthens the firm’s image. Amount spent on equipment, machinery, etc. a remarkable amount of VAT can be reclaimed. And above all, it encourages a business enterprise to keep its records up to date. law implemented is so getting

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