If you have a VAT turnover which is under 1.35 million, it would be a good time to switch to cash accounting. If you are usually owed more than you owe, and you sell goods on credit, at least the first payment of the scheme would be reduced. Because outputs and inputs are not based on amounts invoiced, but rather monies received and paid, you only pay VAT when it is collected from customers.
If your turnover is under 150,000 and you have small amounts of input tax to reclaim each month, the Flat Rate Scheme may increase your retained profits. Each business sector suffers a different rate of VAT so the only way to see if this scheme would be beneficial is to compare the cost of VAT payable under the existing method with that on the Flat Rate Scheme.
Even if you don't qualify for a special scheme, don't forget to claim bad debt relief. Any debt that is over six months old qualifies as a bad debt and you can reclaim the output tax you will have paid. However, if you have invoices unpaid from your suppliers more than six months old, you should repay any input tax you have claimed!
Online, you can also file your VAT return, which will give you seven extra days to file the return. The payment will not appear on your bank account for a further three days if 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.
The Revenue debt helpline has been recently established as a means of helping people with cash flow problems, so if you are having difficulty meeting any VAT or tax payments, call 0845 302 1435. One of our clients has used this recently and found it to be a positive experience.
VAT Changes It was mentioned in our November Financial Monitor which covered the Chancellor's Pre Budget announcements that services or goods which were paid for or invoiced before 1 December 2008, but were supplied after that date then the rate of VAT can be cut from 17.5% to 15%. Suppliers who wish to cut the rate of VAT, although they have no obligation to do so, must issue a credit note by 14 January. If this does not happen, VAT must remain at 17.5%. - 15275
If your turnover is under 150,000 and you have small amounts of input tax to reclaim each month, the Flat Rate Scheme may increase your retained profits. Each business sector suffers a different rate of VAT so the only way to see if this scheme would be beneficial is to compare the cost of VAT payable under the existing method with that on the Flat Rate Scheme.
Even if you don't qualify for a special scheme, don't forget to claim bad debt relief. Any debt that is over six months old qualifies as a bad debt and you can reclaim the output tax you will have paid. However, if you have invoices unpaid from your suppliers more than six months old, you should repay any input tax you have claimed!
Online, you can also file your VAT return, which will give you seven extra days to file the return. The payment will not appear on your bank account for a further three days if 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.
The Revenue debt helpline has been recently established as a means of helping people with cash flow problems, so if you are having difficulty meeting any VAT or tax payments, call 0845 302 1435. One of our clients has used this recently and found it to be a positive experience.
VAT Changes It was mentioned in our November Financial Monitor which covered the Chancellor's Pre Budget announcements that services or goods which were paid for or invoiced before 1 December 2008, but were supplied after that date then the rate of VAT can be cut from 17.5% to 15%. Suppliers who wish to cut the rate of VAT, although they have no obligation to do so, must issue a credit note by 14 January. If this does not happen, VAT must remain at 17.5%. - 15275
About the Author:
Andrew cambridge is an accountant sheffield. Many years of work in accountants he is able to write with first person knowledge.
