VAT Schemes

VAT Schemes

VAT Schemes

VAT Schemes

There are different types of VAT mostly available to small and medium businesses

  • Standard Invoice 🧾 Scheme (Most Common)

Sales Invoices 🟰 Output VAT (A)

Purchase/expense Invoices 🟰 Input VAT (B)

Output VAT (A) ➖ Input VAT (B)🟰 VAT Due or VAT refund

  • In order to justify any VAT Input Claims, the invoices must be available and clear trace of proof of payment
  • Account for VAT regardless of whether the invoice has been received or paid for so this can occasionally put pressure on a business cashflow if credit terms are offered
  • Cash 💰 Basis Scheme

The more simpler method and less burden on cashflow issues

Money received as Sales/Income 🟰 Output VAT (A)

Money paid for Purchase/Expenses 🟰 Input VAT (B)

Output VAT (A) ➖ Input VAT (B) 🟰 VAT Due or VAT Refund

  • Always ensure that have sufficient funds to be able to pay any VAT due on time
  • Some businesses have a separate account to transfer estimated future tax liability

Threshold to use the scheme:

£1.35 million turnover or less

  • Flat % Rate Scheme


16.5% VAT on Sales 🟰 Output VAT (A)

Asset > £2,000 🟰 Input VAT can be claimed (B)

Output VAT (A) ➖ Input VAT (B) 🟰 VAT due or VAT Refund

  • Simple calculation and box 1, 3, 5 usually VAT due with Box 6 🟰 Gross Income

There are many businesses even though on Flat Rate Scheme can apply lower than the 16.5%

The link below explains when this is possible

  • 1% discount In the first year of using a different % subject to the trade

Threshold to use the scheme:

£150,000 turnover or less

  • Annual VAT 🗓️ Scheme

Submit one VAT Return per year and either pay VAT due or receive refund after a year

  • Simple method
  • Can be an issue if the amount built up over 12 months is high and the business has not kept sufficient funds saved due to other costs

Threshold to use the scheme:

£1.35 million turnover or less

Other points

  • Quarterly VAT Reporting is usually most common , however, businesses can also file and complete monthly VAT Returns, which usually assist businesses who expect regular VAT Refunds
  • VAT can be paid manually or set up Direct Debit
  • Direct debit will ensure that any liabilities due are paid on time

Please reach out for free initial consultation and we can discuss on the most suitable VAT Scheme for your business

Tel: 01212852534


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