Choosing the right VAT Scheme could massively improve your cash flow Reply


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 https://stevejbicknell.wordpress.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

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