HM Revenue & Customs has started an education campaign for online businesses, to highlight VAT in relation to internet trading. But it's also highly relevant to all public sector organisations which sell online & are unsure of VAT implications.
HM Revenue & Customs gives its tips on getting things right so that you can avoid a large, unexpected VAT bill or paying out more than you need to. It also explains in brief the different VAT schemes available so that you can choose what suits you.
If you've allowed your site to be used by other companies for the purpose of advertising other services or hyperlinks, VAT will need to be paid on the income. This also applies to sales of domain names, or of customer details to third parties.
Don't forget to declare the VAT on income where auction sites have been used to generate additional sales, or to dispose of assets on a one-off basis.
VAT is payable on most goods and services. A number of schemes exist to help make the process easier. These include:
Annual accounting
- Make one VAT return a year, instead of four.
- Open to all businesses with a turnover of up to £660,000. - Spread the payments by making 10% of your expected annual bill for nine consecutive months, with the final payment due two months after the end of the year.
- Choose an annual accounting year-end to suit business needs. - Newer businesses with an estimated turnover of up to £150,000 can use the scheme from their first year of registration.
Flat Rate Scheme
- Suits small businesses or organbisations.
- Calculate your VAT payment as a percentage of total turnover.
- Less paperwork - businesses still issue tax invoices to VAT registered customers, but do not have to record all the details to calculate VAT.
- Scheme is open to businesses with an annual total turnover of up to £187,500 or an annual tax exclusive taxable turnover of £150,000.
Cash accounting scheme
- Can help some businesses with cash flow.
- Allows businesses to account for VAT output tax on the basis of payments receive, rather than invoices issued.
- Suitable for traders with taxable supplies of up to £660,000 or less.
- Good for businesses that incur debts as a result of not being paid by customers, as you may be able to claim relief from VAT on bad debts incurred.
Quelle: Publictechnology, 28.02.2006
