Who's VAT registered and how do you manage your quarterly VAT returns? (FreeAgent, Xero, etc.,)

[Ricochet J]

Hi,

We're becoming voluntarily VAT registered as it now makes sense for us to do so.

We bank with Natwest so we get a license of FreeAgent (we have a startup account with them).

Online articles suggest FreAgent will automatically compile and send quarterly VAT reports to HMRC on your behalf.

Who does this using FreeAgent or Xero or any other software? What do I need to be aware of?

 

[shine]

I use FreeAgent through my Accountants so they double check everything but it is simple to use.

You upload your transactions into FreeAgent, select the correct category of purchases (there's a pre-populated drop down list), select the correct VAT rate and the software does the rest.

 

[Ricochet J]

Is an accountant absolutely necessary - we're a fledgling startup with no accountant yet - April 2019 will be our first tax year where will get an accountant to do our accounts.

 

[shine]

It's not necessary, FreeAgent is easy to use but I would always recommend to have a good accountant.

 

[Maccy]

You can get a good accountant for under £100 a month, surely it's a no brainer?

 

[Regy53]

yep, depending on what your doing and how many transactions you make i would recommend a accountant i think they can save you what they cost.

I give mine all my paperwork quarterly and they take care of everything for me

 

[Steedie]

My accountant is great, I could probably do it myself but for £90 a month, it's better to let them do it all that kind of stuff. They just let me know each quarter how much I need to pay and I pay it. Job done, takes 2 minutes

 

[Maccy]

Oh and on the subject of VAT registered, I actually got my VAT number through this morning

 

[Ricochet J]

Thanks folks - I'll start paying an accountant towards the end of this year.

Oh and on the subject of VAT registered, I actually got my VAT number through this morning

How long did it take you from signing up to receiving your number? Do you have purchases which you'll claim VAT back on, from before you received your number?

 

[Maccy]

I asked my accountant to register my company for VAT on Tuesday I think and I got the number through this morning, the certificate could take a few weeks to come though.

I'm on the flat rate VAT scheme where I charge VAT for services and retain a proportion of it (I think in the first year you pay 14.5% back to HMRC). The other scheme is where you just claim VAT back on purchases - I don't make enough purchases to warrant being on that scheme.

 

[shine]

Do you have purchases which you'll claim VAT back on, from before you received your number?

There was a delay when I applied for my VAT number. The VAT certificate was back dated to my original application. I was able to claim for the VAT of purchases from the date my VAT became effective.

Again my accountant take care of all of this.

 

[Freakbro]

I asked my accountant to register my company for VAT on Tuesday I think and I got the number through this morning, the certificate could take a few weeks to come though.

I'm on the flat rate VAT scheme where I charge VAT for services and retain a proportion of it (I think in the first year you pay 14.5% back to HMRC). The other scheme is where you just claim VAT back on purchases - I don't make enough purchases to warrant being on that scheme.

There are many rates on the Flat Rate Scheme, dependent upon the classification of your business. It ranges from 4% (lowest) to 14.5% (highest) - sorry Maccy

You will get a 1% discount for the first year as a VAT rated business.

What you do in the FRS is take your gross turnover (Net + VAT) and x by the FRS % and that is the VAT you have to pay. (There is an exception if you make a capital purchase over £2000)

The normal method is you take your sales VAT less you Purchase VAT and that's what you have to pay.

FRS is good for companies that have little purchases or little VATable purchases.

 

[Maccy]

Glad I've just purchased a new laptop for over £2k then

 

[Pudney]

There was a delay when I applied for my VAT number. The VAT certificate was back dated to my original application. I was able to claim for the VAT of purchases from the date my VAT became effective.

Again my accountant take care of all of this.

You can actually claim VAT back on purchases made before the registration date subject to certain rules.

There are many rates on the Flat Rate Scheme, dependent upon the classification of your business. It ranges from 4% (lowest) to 14.5% (highest) - sorry Maccy

You will get a 1% discount for the first year as a VAT rated business.

What you do in the FRS is take your gross turnover (Net + VAT) and x by the FRS % and that is the VAT you have to pay. (There is an exception if you make a capital purchase over £2000)

The normal method is you take your sales VAT less you Purchase VAT and that's what you have to pay.

FRS is good for companies that have little purchases or little VATable purchases.

FRS used to be good for companies with little purchases, however, limited cost rules were introduced in April 2017 that complicated things. Effectively if you're a limited cost trader the percentage you have to use is 16.5%. I seem to recall reading somewhere in a tax journal (it's my job, reading this type of thing counts as CPD for me!) about the change effectively becoming a net cost to the trader rather than a benefit.

 

[Freakbro]

FRS used to be good for companies with little purchases, however, limited cost rules were introduced in April 2017 that complicated things. Effectively if you're a limited cost trader the percentage you have to use is 16.5%. I seem to recall reading somewhere in a tax journal (it's my job, reading this type of thing counts as CPD for me!) about the change effectively becoming a net cost to the trader rather than a benefit.

Yea, I did just spot that, but thanks for the clarification. I only have one client using FRS and he wouldn't fall under that category

 

[shine]

You can actually claim VAT back on purchases made before the registration date subject to certain rules.

Like I said my accountant took care of it!

 

[Steedie]

Yeah my accountant told me to ditch the FRS ages ago, which has been good as it means I can reclaim VAT on most purchases now and the amount I pay back means I'm better off than I would have been on the FRS

 

[Russinating]

To answer the original question, we've used Xero for about 3 years and it's great. We also use it for payroll and all the general accountancy functions. Our accountant has access to it for our EOY audits/submissions etc but otherwise we do everything else in between.

 

[wez130]

I just pay an accountant to do mine. One less thing to worry about.

 

[Russinating]

I just pay an accountant to do mine. One less thing to worry about.

The only reason we don't is it's literally the click of a button and then I know how much will drop out of our account as a result . Mind you, we do our own payroll as well.