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| Accountant Sheffield - VAT advice to Help Cash Flow |
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| Written by Andrew Cambridge |
| Friday, 23 January 2009 14:20 |
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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. You can also claim bad debt relief, even if you don't qualify for a special scheme. To qualify as bad debt, the debt has to be over six months old. You can reclaim the output tax you will have paid. You should however repay any input tax you claim to your suppliers if you have unpaid invoices. It's also worth filing your VAT return online. You are given an extra seven days to file the return and if you pay by direct debit, the payment will not appear on your bank account for a further three days. People who are self employed and are used to paying on account of tax liabilities in Janiary and June each year will pay any balancing amount of tax for the accounting year ending in the tax year to 5 April 2008 in January 2009. You will also pay half the anticipated liability for the accounting year ending in the tax year to 5 April 2009. If you make payments on accounts, it will be assumed that profits for 2008/09 ae the same as for 2007/08. These can be changed if you anticipate a fall in profit due to current economic climate. To discuss whether this is necessary, please contact your usual member of our Tax Team. If you do not anticipate a fall in profits, do not be tempted to reduce the payments on account, as this will lead to possble penalties and punitive interest charges. Clients who are struggling with with meeting VAT or tax payments can call the Revenue debt helpline, which has been created to help those with cash flow problems. The telephone number is 0845 302 1435. 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%. About the Author: Andrew cambridge is an accountant sheffield. Many years of work in accountants he is able to write with first person knowledge. Kindly provided by LJ-Marketing.dk You are welcome to use this article on your own website, if you include the link just before this text. |
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