Small Business: Essential VAT Guide November 2016

VAT scheme eligibility VAT accounting scheme Flat Rate Scheme Cash Accounting Scheme Annual Accounting Scheme Threshold to join scheme £150,000 or less £1.35 million or less £1.35 million or less Threshold to leave scheme More than £230,000 More than £1.6 million More than £1.6 million Compliance You must keep VAT records for at least six years. You can keep them on paper, electronically or in software. Records must be accurate, complete and easy to access. If you’ve lost a VAT invoice you can’t rely on a photocopy. Ask the supplier for a duplicate (marked ‘duplicate’). You must keep a separate record of the VAT you charge and the VAT you pay on your purchases. This record is called a ‘VAT account’. There aren’t any rules on what a VAT account should look like, but it must show:  Your total VAT sales  Your total VAT purchases  The VAT you owe HMRC  The VAT you can reclaim from HMRC  If your business uses the VAT Flat Rate Scheme – the flat rate percentage and turnover it applies to  The VAT on any EU acquisitions (purchases) or dispatches (sales)  The VAT you owe or are entitled to following a correction or error adjustment VAT Invoices  The following 13 elements must be included on an invoice for it to comply with VAT regulations:  Unique invoice number that follows on from the last invoice  Your business name and address  Your VAT number  Date  The tax point (or ‘time of supply’) if this is different from the invoice date  Customer’s name or trading name, and address  Description of the goods or services  Total amount excluding VAT 6

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