Choosing the right scheme for you.
Just about everyone has heard of VAT (value-added tax). We’re used to paying it on many of the goods and services we purchase as we go about our everyday lives.
But when you have your own business, you’ll learn a whole new world of VAT exists as you work out how to apply it to your own trade. That’s because there are numerous VAT accounting schemes that HMRC offers, and which one is right for you will depend on the nature of your business.
To get you up to speed, we’ll take a look at each of the main VAT accounting schemes, explaining how they work and who they might suit.
How does VAT work?
Once you reach a turnover in excess of £85,000 over the last 12 months you must register for VAT. If you are below that threshold, you have a choice as to whether to do so.
By voluntarily registering for VAT while below the threshold, you can create a more professional image of your company with financial documents and reclaim VAT on qualifying expenditure.
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