2021 Budget Report
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You must register when you go over the threshold of £83,000, or know that you will. This threshold is based on your VAT taxable turnover – the total of everything sold that isn’t VAT exempt.
You can register voluntarily if you want to. This may be something to consider if, for instance, you have expensive set up costs and your customers are in business rather than being the general public. This means you will be likely to receive VAT refunds in the early period of running your business while your income builds up, and other VAT registered businesses are not affected by an increase in your prices (due to you being VAT registered).
Yes, input VAT is reclaimable by the employer on the cost of trivial benefits made to staff, assuming VAT has been charged on them.
However, be careful: if you are a one-man owner/director with no staff, HMRC will disallow a VAT reclaim on the grounds that the motive behind incurring the cost was a personal one. It is difficult to disprove this, so we would not recommend you reclaim the VAT in this case.
No, travel costs are a recharge and so VAT must be charged on top of these when you invoice your customer. You don’t have to itemise recharges on your invoice.
|Fee for work done||£1,000|
|Total before VAT||£1,050|
|VAT at 20%||£210|
|Total payable by customer||£1,260|
For travel costs to be treated as a disbursement the customer would have to make the journey, not you.
A disbursement is an expense that you have agreed to pay on your customer’s behalf, and then later pass on the cost to them. If your customer has received or used the goods or services it is their purchase, not yours.
For example, you have paid for goods and given them to the customer:
|Fee for work done||£1,000|
|VAT at 20%||£200|
|Total thus far||£1,200|
|Total payable by customer||£1,560|
A full list of conditions for treating costs as a disbursement can be found in this HMRC notice https://www.gov.uk/vat-costs-or-disbursements-passed-to-customers
The main difference is their respective treatments of time.
The balance sheet is a snapshot of the financial position of a company at one specific point in time; usually at the company’s year end. It shows the book value of the fixed assets held, the amount of money owed to the company by its debtors less the amount of money owed by the company to its creditors. At the bottom of the balance sheet you will see the shareholders equity, which tells you what the company is worth.
The profit and loss account shows sales, cost of sales and expenses across a period, usually a year. From looking at the profit and loss account you will see if the company is profitable.
You can check a VAT number on the VIES (VAT Information Exchange System) website http://ec.europa.eu/taxation_customs/vies/
This site can be used to validate any VAT number in any EU country. You will need to know the member state (country) of the registration and the VAT number. You will also be asked for your member state and VAT number, you do not need to complete these but if you do you will be given a check reference number as evidence of the search.
Not all European businesses will opt in to their full details being displayed but you will still be told whether the VAT number is valid.
Your re-enrolment duties must be carried out around three years after your automatic enrolment staging date. You should choose a date within three months before and three months after that staging date.
All eligible employees must be re-enroled, including those who have opted-out previously, you should send correspondence to those employees.
You will need to complete a re-declaration of compliance to the pension regulator to confirm you have met your duties. This applies even if you have no staff. Remember, re-enrolment and re-declaration is your legal duty and if you don’t act you could be fined.
Automatic enrolment takes place around every three years. If you are eligible your employer has a legal duty to re-enrol you to your workplace pension scheme regardless of whether you have opted-out previously. Your employer will provide you with correspondence and if you wish to opt-out again you must inform the pension scheme provider as you did originally.
From April 2020 medium and large companies will be responsible for deciding if a contractor working for them, through a service company, is deemed to be under IR35 or not.
Previously this burden was on the contractor and it will remain that way if you work for a small company. If the company conclude that you do fall under IR35, they must deduct tax and NIC from you and they must pay employers NIC.
IR35 status depends on various aspects of your role in the business and HMRC have a tool that allows you to answer questions about this to give you a decision on your employment status:
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