Some of the key facts and figures about VAT and related systems are listed below.
Updated 14 May 2021
Only a summary is given and you should always seek detailed professional advice on your specific circumstances.
VAT Registration and Deregistration Thresholds
VAT Registration
£85,000
VAT Deregistration
£83,000
VAT Rates
Standard Rate
20%
Reduced Rate
5%
Super Reduced Rate
0%
Farmers Flat Rate Addition
4%
VAT Return Filing Periods
Small Businesses (Turnover < £1,350,000)
Annual (optional)
Businesses in a net repayment position
Monthly (optional)
Large Businesses (Annual VAT Liability > £2,300,000)
Monthly (optional treatment in lieu of quarterly returns + monthly payments on account)
All other businesses
Quarterly (businesses can choose which quarters to use)
Pre-Registration Input Tax – Time Limits
Goods still on hand at time of registration
VAT is recoverable if incurred in the 4 years prior to VAT registration.
Services (unless relating to goods consumed pre-registration)
VAT is recoverable if the service was received in the 6 months prior to registration and for the purpose of the business now covered by the VAT registration.
VAT Return Filing and Payment Deadlines
Paper returns (available in very limited circumstances) and users of the Payments on Account Scheme.
30 days from period end
Electronic returns (excluding users of the Payments on Account Scheme)
37 days from period end
Filing Periods and Deadlines – other returns
Foreign Business VAT Refunds – Filing Periods and Deadlines:
Filing Period
Max = 12 months (1 July to 30 June) Min = 3 months
Filing Deadline
31 December
Penalties
1. Failing to register on time
Careless
10% – 30% of net VAT due
Deliberate
20% – 70% of net VAT due
Deliberate and concealed
30% – 100% of net VAT due
2. Failing to file and pay VAT on time
1st Default
0%
2nd Default
2% of unpaid amount
3rd Default
5% of unpaid amount
4th Default
10% of unpaid amount
5th Default
15% of unpaid amount
Note: The first default triggers a 12 month default surcharge period and a surcharge of 0%. The second and subsequent defaults extend the default surcharge period by 3 months and the surcharge increases to 2%, 5% and so on.
3. Errors on VAT Returns
Careless
0% – 30% of value of error
Deliberate
20% – 70% of value of error
Deliberate and concealed
30% – 100% of value of error
Capital Goods Scheme Items
Item
Value
Adjustment Period
Computers, single items of computer hardware, ships or aircraft
£50,000 or more excluding VAT
5 years
Land and buildings (including civil engineering works, refurbishments and fit outs)
£250,000 or more excluding VAT
10 years – (5 years where the interest acquired has less than 10 years to run).
VAT Error Disclosure Thresholds
Net Value of Error
Method of Disclosure
< £10,000
VAT Return (see note below)
< £50,000 AND < 1% of Box 6 Value All other amounts
VAT Return (see note below) VAT 652 form
Note: To achieve the maximum opportunity of minimising penalties taxpayers can include the net value of errors discovered on the current VAT return and may notify this action to HM Revenue & Customs using a VAT 652 form.
Special Schemes
1. Cash Accounting
Joining Threshold
Turnover < £1,350,000 less than or equal to
Leaving Threshold
Turnover ‹ or › £1,600,000 turnover exceeds £1,600,000
2. Annual Accounting
Joining Threshold
Turnover < £1,350,000 less than or equal to
Leaving Threshold
Turnover ‹ or › £1,600,000 turnover is more than £1,600,000
3. Flat Rate Scheme for Small Businesses
Joining Threshold
Taxable Turnover (Exc VAT) < £150,000 less than or equal to
Leaving Threshold
Total Business Income (Inc VAT) > £230,000
4. Payment on Account Scheme
Annual VAT Liability > £2,300,000
Special rules affecting businesses in Northern Ireland
VAT Registration and Deregistration Thresholds
Distance Selling
£70,000
Relevant Acquisitions
£85,000
EC Sales Lists (Goods) – Filing Periods:
Dispatches < £35,000 per quarter
Calendar quarters
All others
Monthly
EC Sales Lists (Services) – Filing Periods:
Normal
Calendar quarters
Optional
Monthly
EC Sales Lists – Filing Deadlines:
Paper returns
14 days from period end
Electronic returns
21 days from period end
Intrastat
Thresholds:
Dispatches Exemption Threshold
£250,000
Acquisitions Exemption Threshold
£1,500,000
Delivery Terms Exemption Threshold
£24,000,000
Filing Periods:
Dispatches
Monthly
Acquisitions
Monthly
Deadlines:
Dispatches
21 Days
Acquisitions
21 Days
Specific advice should be obtained before taking action, or refraining from taking action, in relation to the above.
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