Simpler VAT For A Newly Formed Company
Simpler VAT For A Newly Formed Company - UK Company Formation - Company Registration Services
Certain flexibilities are built in to the standard VAT scheme which allow Companies in certain positions to simplify the way they calculate and submit their VAT returns:
The cash accounting VAT scheme
Provided your company's sales are below £660,000 per annum, output VAT can be calculated on a cash basis. That is, instead of accounting for tax when a company issues an invoice, the basis can be changed so that VAT is only payable when the cash is received.
This can have a massive positive cash impact on a new company as cash is sometimes received some time after the invoice has been issued.
The annual VAT scheme
The vast majority of companies account for their VAT of a quarterly basis. Companies with sales of less that £660,000 can choose to submit their returns on an annual basis. i.e. one return at the end of the year.
The drawback of this scheme is that regular amounts would have to be paid to Customs and Excise based on an estimated final liability. The administration of VAT may be made easier by only having to do it once as opposed to four times a year.