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Helping Small Businesses in Croydon, Surrey and South London
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VAT is essentially a simple tax that has become fiendishly more complicated than anyone could ever have imagined when it was first introduced to the UK in 1973. The basic principles are fairly simple and most businesses only need to deduct inputs from outputs and pay the difference over to the Revenue each quarter. Yet a quick glance at the leaflet accompanying each VAT return updating you on recent changes in VAT law will give you an idea of the technical issues involved. How can you avoid falling foul of the ever-changing rules and regulations?

Well for a start, you need to know which of your outputs are standard rated, which are zero rated and which are exempt. This will depend on the type of goods and services being supplied and also on the place of supply. For goods this will always be where the supplier is based, but for services supplied to businesses in other EU countries it will be where the customer is based. The type of supplies you make may also affect how much input tax you can recover on your overheads. Normally you can recover all input tax, but sometimes you will be only partially recoverable, and in that case you will need to agree a recovery rate with your VAT office and keep track of all your exempt supplies.

International trade is also a complex area. Supplies of goods and services within the EU are normally zero rated provided that the consumer is VAT registered, but there are procedures you need to follow to take advantage of this, and you may even need to register in other EU countries if your supplies exceed certain limits. Reverse charges may apply to both goods and services obtained from other EU countries, and you may have to pay import duty if you have purchased goods from a non-EU country.

In addition to this, there are some special VAT schemes you may need to be aware of, such as the various margin schemes for retailers or the capital goods scheme. Smaller businesses may be able to take advantage of the flat rate scheme or the annual accounting scheme. It is important to know whether you will benefit from these or not.

Land and property is an area requiring specialist advice. Rent is normally exempt from VAT and any input tax incurred on expenses related to let property is non-recoverable. However, in certain cases it may well be advantageous for you to waive this exemption. You need to make sure you get your VAT strategy correct from the outset as mistakes can be difficult to rectify later.

At Acumen, we can advise you on all aspects of VAT and act as your agent. Please give us a call if there are any VAT issues you wish to discuss. Meanwhile, the following information sheets and tax tips will tell you more.

Information Sheets Tax Tips
bulletpoint Registration
bulletpoint VAT invoices
bulletpoint Electronic invoices
bulletpoint VAT self-billing
bulletpoint TOMS
Voluntary registration
Check if it would be beneficial for you to register voluntarily for VAT
Flat rate scheme
Calculate whether you would be better off using the flat rate scheme
Consider opting to tax if you are letting out commercial property
Cash accounting
If you have a high level of debtors, consider using the cash accounting scheme
Staff expenses
Ask your staff to ensure that large expenses such as hotel bills are made out to the company
EU suppliers
Make sure that suppliers from other EU countries have your VAT number so they can zero-rate their invoices.
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