The VAT Jargon-Buster For Business
Value-added tax (VAT) is complicated for most people because of the difficult terminologies and processes. You can reclaim VAT with the help of skilled accountants in Balham. This is true if you’re a VAT-registered business.
You can also learn more about key VAT terminologies to understand the concept better. Luckily, you don’t have to look far for this information. This post will help you master all terms related to VAT.
The VAT Jargon-Buster For Business
Here is the key VAT jargon that HMRC uses during reclamation requests and other processes:
- 12-Month Period
This is one of the most confusing terms related to VAT because it does not refer to a calendar year. A financial year also has no relation to the 12-month period. Instead, it is the rolling period of your business.
So the period refers to the completion of the first year of your business. After that, you will have to remove the oldest month of your company from the period and add the latest month.
Your figures during the 12-month period matter a lot because they should not pass to a certain extent. If it does exceed the threshold, you will have to register your business for VAT. In the UK, this limit is £85,000.
- Accounting Scheme
The word accounting refers to the various accounting schemes that come under VAT. You can master this jargon by hiring skilled accountants in Balham.
These individuals will help you understand terms related to VAT and choose the best accounting scheme. An accountant will also help you when you want to reclaim VAT.
- Deregistration
The HMRC allows you to cancel your VAT registration in different cases. You can do this if your company is no longer operating. If your business becomes ineligible due to low turnover, you can cancel the registration.
This cancellation of registration is known as deregistration in the VAT world. If you become ineligible, you must cancel the registration within 30 days. Otherwise, the HMRC gets the right to charge you with various penalties.
- Exempt Goods
You can reclaim VAT for various things if you’re a VAT-registered business. However, there are some items and services that you cannot get a refund for. These include food, drinks, and personal items for yourself and your employees.
Postage stamps and health insurance also come under the exempt goods. You cannot reclaim VAT for these things regardless of the fact that your business makes taxable supplies only.
- Taxable Supplies
Taxable supplies are primarily items that are provided by a taxable person or VAT-registered business. These supplies are liable to value-added tax at three different rates:
- Standard rate
- Reduced rate
- Zero rate
These supplies are also the only things you can reclaim VAT for. So items that do not fall under the taxable category come under the exempt category. This means you can reclaim VAT for taxable supplies.
Final Thoughts
This is your complete VAT jargon-buster for business. Many other terms are also used by the HMRC. You can learn more about them through accountants in Balham or other parts of the UK.
