Tax Tips > National Insurance and VAT

  • Cash Accounting and Flat Rate Scheme. Both of these special schemes for calculating the VAT you need to pay may reduce the cash flow impact of your quarterly payments. The entry rules are complicated. Call us if you would like more information.
  • VAT - Defer Registration If you are starting up a new business there may be a way to avoid vat registration for a period if the circumstances of your business are appropriate. This will especially benefit service trades to the general public with low vatable purchases.
  • Buying a business including VAT? If you are about to buy a business and the seller wants to charge VAT on the sale price, beware! You may not be able to recover the VAT charged. Please consult with us before you sign the contract!
  • Save NIC by reorganising your bonuses  If you are presently paid regular bonuses, say weekly or monthly, you may save NIC if you are paid the same bonuses less frequently. Say half yearly or annually.
  • If you are buying an old property  that has been empty for at least three years, you may be eligible for favourable VAT treatment. You may only need to pay VAT at 5% on renovation work.
  • VAT - Reconcile sales for year with your VAT Returns  Every quarter when you fill in box 6 on your return, "Total value of sales" you are giving the VAT man a valuable piece of information. When he comes along for the periodic visit he will add up the value of sales you have returned and compare them with your accounts. If the sales in your accounts are higher than the outputs, sales declared on your VAT returns then watch out. He will seek to raise an additional assessment.
  • Reclaim input VAT on invoices received after you de-register for VAT by completing form 427. Customs and Excise will allow a late claim. Don't forget to attach the relevant invoices.
  • Recover VAT on invoices that you have paid or received before you register for VAT by including the input VAT on your first return. Check with your local VAT office that will advise what you can claim.
  • Entertaining customers in the UK is no longer a tax deductible expense, but if you are registered for VAT there are circumstances when you are allowed to claim back the input tax on your share of the bill.
  • Reclaim input VAT if your employees use a rate per mile to calculate the business use of their private car. Customs and Excise provide a chart which explains the claims procedures.
  • Take your wife or husband into the business as a partner and don't forget they will need to pay Class 2 NIC as well as you!
  • Apply for a certificate of exception if your earnings from self-employment are low. This may eliminate your class 2 National Insurance liability.
  • Apply for deferment or exception from National Insurance and you may save money in the short term. Check out the pros and cons with the DSS. It may pay you to make the contributions and safeguard your state pension.
  • Keep a weather eye on your annual turnover and make sure that you register for VAT as soon as you should. You will avoid penalties, interest and VAT that you may be unable to recover from your customers. You can always call, we will be happy to clarify the registration rules as they apply to your case.

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