VAT is applied to certain goods, services and other taxable supplies that can be brought and sold in the UK. VAT it usually charged onto of your product sales price to the customer. This amount is therefore collected by the business for HMRC.

There are three types of VAT rates

Standard 20% -  most goods and services are charged at this rate

Reduced 5% - A certain type of goods and services that HMRC consider that can be reduceds such as home energy,  car seats, residential property conversions etc.

Zero 0% - Food and children’s clothing

Once registered for VAT your business will need to include the relevant rate of vat on all their taxable sales (Output Tax).

Once you have a VAT registered business you can now reclaim VAT paid on purchases that were relating to the business (Input Tax)

The payment you make to HMRC will be your Output tax less your input tax.

​You would normally submit your VAT returns  every 3 months to HMRC and will need to be signed up to a online software that is compatible with MTD (Making Tax Digital) This is a requirement from HMRC. At Yahesa Accounting we have these systems all included within your packages.

As a VAT registered business you will need to keep certain records for HMRC. A VAT Registered business must keep electronic records of sale and purchases and keep a summary of VAT called a VAT account.  You must also issue correct VAT invoices to your clients.

You must keep VAT records for at least 6 years. The records must be accurate complete and readable.

For VAT inclusive prices (VAT included in the price) you simply multiply the price (without VAT) by 1.2 (standard rate of vat of 20%)

For VAT exclusive prices (VAT not included in the price) simply divide the total price (including VAT) by 1.2 (standard rate of vat of 20%)