VAT and Tax Return

VAT and Tax Return

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Hi,

I am just completing the accounts for a tax return for 2013/2014. I know that normally one would submit turnover figures net of VAT, but would this still be the case if the business only registered for VAT as at 1st March 2014, i.e. one month before the end of the tax year?  I'm not sure how to accurately convey the turnover figure.  Any help would be greatly appreciated!

Many thanks,

Clare

Replies (7)

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the sea otter
By memyself-eye
04th Jan 2015 15:18

Is it not simple enough

to calculate one month's VAT due?

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By DKB-Sheffield
04th Jan 2015 15:33

Yes

Clare,

The accounts should contain the sales and expenses as they are included for tax at the time of the transaction.

That said:

Sales : These figures are always VAT exclusive. For example, pre VAT reg. you charge £100 for an item (no VAT). Post VAT reg you charge £120 (inc. VAT). Pre VAT reg, the item will be £100, post VAT reg, the item will also be £100

Expenses : If you purchase an item for £120 (inc. VAT) pre reg, the entry will be £120. The same item post reg. will be £100 (+£20 VAT)

Warning : Where you have reclaimed VAT post reg. on stock, fixed assets etc. and where those items were purchased prior to VAT reg., you should deduct the VAT reclaimed against the correct expense/ asset account.

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Out of my mind
By runningmate
04th Jan 2015 15:59

There are other possibilities

The method for accounting for VAT might be different if the client is not using standard VAT accounting for HMRC purposes (for example if using the Flat Rate Scheme or a margin scheme).

RM

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Replying to Justin Bryant:
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By DKB-Sheffield
04th Jan 2015 16:29

Agreed but, it was an example not a definitive list

runningmate wrote:

The method for accounting for VAT might be different if the client is not using standard VAT accounting for HMRC purposes (for example if using the Flat Rate Scheme or a margin scheme).

RM

Yes, I agree this makes things slightly more complex. However, in all cases, sure the VAT would not be included within the "Net Income" and "Net Expenses" lines.

The calculation of the VAT due is different but the VAT should still be removed from the relievable expenses.

It would be helpful perhaps if the OP can confirm their VAT Scheme and then I can re-issue my advice as required. I don't however at this stage plan on re-stating it for every possible VAT Scheme, partial exemption etc...

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RLI
By lionofludesch
04th Jan 2015 16:35

General rule

The general rule is that sales should to be VAT exclusive.

Though HMRC will accept VAT inclusive accounts.  There are boxes to tick in the self employed pages.

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Replying to DJKL:
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By DKB-Sheffield
04th Jan 2015 16:59

VAT Inclusive

lionofludesch wrote:

The general rule is that sales should to be VAT exclusive.

Though HMRC will accept VAT inclusive accounts.  There are boxes to tick in the self employed pages.

I accept that HMRC will accept VAT inclusive accounts though, I must say this is not something I have ever done.

However, in this scenario, where the VAT registration was only active for 1 month, I would suggest that the best option is to go for VAT inclusive for months 1 - 11 (i.e. before registration) VAT exclusive for the final mont (with any brought forward corrections for stock, fixed assets etc.).

I personally feel that in this case, by saying the figures are VAT inclusive for 12 months, this is not in fact true. For the first 11 months, the business was not VAT registered and hence out of scope. Hence, it was only truly VAT inclusive for 1 month. 

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RLI
By lionofludesch
04th Jan 2015 17:22

Costs

The point I was making - albeit without clarity - was that, given that the business was only registered for one month of the year, there might be a case for preparing the accounts VAT inclusive for this transitional year.  Bung in an accrual for the VAT liability and the profit shouldn't be affected.

Depends on what sort of an entity we're dealing with, how much accountancy cost is involved for no benefit whatsoever, how the books are kept and presented and, no doubt, other things. There's not enough information given.

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