VAT Online Requirements

Most small businesses will be aware that online filing of VAT returns becomes mandatory from April 2010. Businesses with an annual turnover of £100,000 or more will be required to file and pay VAT by electronic methods from April, as will businesses that register for VAT from 1 April 2010, irrespective of size. This applies to VAT returns that cover accounting periods starting on or after 1 April 2010.                                                                                                                                                As at 31 December 2009 any business with an annual turnover of £100,000 or more will be included in the requirement to file online. This applies whether or not turnover subsequently falls below that level. Registered traders who meet this criteria will receive letters from HM Revenue and Customs (HMRC) explaining how the on-line system works. HMRC have stated that their intention is for all VAT returns to be filed on-line by 2012, so all businesses will need to make the necessary preparations to file on-line.

Penalties

Penalties will be levied on businesses failing to file on-line and these will apply to returns for periods ending on or after 31 March 2011, therefore allowing a period of one year to adjust before the financial penalties are imposed. The penalties increase according to the VAT exclusive turnover of the business failing to make the return by the required method. The penalties for small businesses are as follows:

•  Turnover £100,000 and under – £100
•  Turnover £100,001 to £5,600,000 – £200

Completing the return

Filing on-line may lead to the temptation to reduce your paper records but it is still important to keep a trail whether paper or digital of your completed returns and workings. Once the return has been submitted you will receive an onscreen unique submission receipt reference number which you should save or print in case of subsequent queries. Leading software suppliers include on-line filing of VAT within its applications making the process even simpler and this may encourage you to start using accounting software rather than maintaining manual records.

Help is at hand

To assist anyone unsure of how to register, there is a handy beginners guide to assist you when registering for on-line filing which can be found on the HMRC website www.hmrc.gov.uk or we can mail the guide in pdf format if you contact us as info@keithwoodassociates.com

If you do have any problems regarding VAT on-line or any other accounting issues please contact us on 01449 798285.