Day: March 10, 2012

Choosing the right VAT Scheme could massively improve your cash flow

For SME’s there are lots of options, here is a quick summary:

Standard VAT Scheme – on this scheme the VAT is based on tax points from invoices

Flat Rate VAT Scheme – If your turnover is below £150k you could join the Flat Rate Scheme, this scheme applies a % to your sales to work out your VAT Liability, it can make VAT returns easier to complete and in can sometimes work in your favour as the Flat Rates may mean you pay less VAT, if you join in your first year of VAT registration you get an extra 1% off the rate for the first year.

http://customs.hmrc.gov.uk/channelsPortalWebApp/channelsPortalWebApp.portal?_nfpb=true&_pageLabel=pageVAT_ShowContent&propertyType=document&id=HMCE_CL_000345#P31_2162

http://www.hmrc.gov.uk/vat/start/schemes/flat-rate.htm#4

VAT Cash Accounting Scheme – if your turnover is below £1.35m you can account for VAT on a Cash basis, this is particularly helpful if your customers pay you on slower terms than you pay your suppliers

http://www.hmrc.gov.uk/vat/start/schemes/cash.htm

Annual Accounting Scheme for VAT – if your turnover is below £1.35m you could join the Annual Scheme and complete one return for the year but you make either 9 interim payments or 3 quarterly interim payments

http://www.hmrc.gov.uk/vat/start/schemes/annual.htm#1

Retail VAT Schemes – These are specific schemes aimed at mainly at shops and help to overcome the issues of mixed vat rate goods

http://www.hmrc.gov.uk/vat/start/schemes/retail.htm#2

VAT Margin Scheme – The margin scheme relates to second hand goods and accounts for VAT on the margin, for example on the sale of cars

http://www.hmrc.gov.uk/vat/start/schemes/margin.htm

The cash flow impact of the different schemes can be considerable, to get an idea of impact consider your cash cycle http://stevejbicknell.com/2012/03/07/the-cash-cycle-what-is-it-what-is-your-cycle-how-can-you-improve-it/

To identify which schemes are availble to you take this test

http://www.businesslink.gov.uk/bdotg/action/layer?topicId=1074419970&r.s=sl

steve@bicknells.net

You could face a £1000 penalty for non compliant Letterheads

We have all been aware of this for sometime now, but Indicator have highlighted that Companies House are now taking a harder line and giving out £1000 penalties, so what are the rules:

The Companies (Trading Disclosures) Regulations 2008

(1) Every company shall disclose its registered name on—

(a)its business letters, notices and other official publications;
(b)its bills of exchange, promissory notes, endorsements and order forms;
(c)cheques purporting to be signed by or on behalf of the company;
(d)orders for money, goods or services purporting to be signed by or on behalf of the company;
(e)its bills of parcels, invoices and other demands for payment, receipts and letters of credit;
(f)its applications for licences to carry on a trade or activity; and
(g)all other forms of its business correspondence and documentation.

(2) Every company shall disclose its registered name on its websites.

http://www.legislation.gov.uk/uksi/2008/495/regulation/6/made

Letterheads: Company letterheads must show:

  1. The name of the company. This must end in “Limited” or “Ltd” or their Welsh equivalents. If the name you trade under is different in any way from the name of your company as shown on your certificate of incorporation, then the full name, including “Limited” etc must be shown on the heading, usually at the foot.
  2. The registered office. It must be identified as the registered office. If there is only one address shown on the letterhead, the words “Registered Office” can appear in small type just above or below, or you can mention it at, say, the foot of the heading by saying “Registered at the above address”, or something similar. The important point is that your registered office must be clearly identified. If this were an address other than your trading address then it would be appropriate to print the address, clearly identified as such, in small type at the foot of the letterhead and the trading address elsewhere in larger type.
  3. The registered number.
  4. Whether registered in England (or ‘England & Wales’) or Scotland.
  5. A Welsh company which has chosen “Cynfngedig” instead of “Limited” as the last word of its name must also state (in English) that it is a limited company.

http://link4business.info/2008/08/business-disclosure-requirements-information-which-must-appear-on-your-letterheads-invoices-websites-and-email-messages/

Make sure you comply, no one wants a penalty.

steve@bicknells.net