VAT: an introduction
VAT is a tax on most goods and services. If your taxable turnover passes the registration threshold you must register, and you can choose to register voluntarily below it.
- You charge VAT on your sales (output tax) and reclaim VAT on purchases (input tax)
- Different rates apply — standard, reduced, zero — and some supplies are exempt
- Voluntary registration can pay off if you sell to VAT-registered customers
- Once registered, returns are usually filed quarterly
How MMC helps: we advise whether and when to register, set up your VAT correctly, and take on the returns. Current thresholds are on our tax rates & allowances page.
VAT schemes
Several optional schemes can simplify VAT or improve your cash flow. The right one depends on your size, sector and how you trade.
- The Flat Rate Scheme simplifies VAT for smaller businesses
- Cash Accounting means you account for VAT when you're paid, not when you invoice
- Annual Accounting reduces the number of returns and smooths payments
- Margin schemes apply to certain second-hand goods
How MMC helps: we compare the schemes against your figures and put you on the one that genuinely suits your business.
Making Tax Digital for VAT
Making Tax Digital (MTD) for VAT requires VAT-registered businesses to keep digital records and submit returns using compatible software.
- Records must be kept digitally, with a digital link through to your return
- Returns are submitted through MTD-compatible software
- Choosing the right software makes compliance simple rather than a chore
- It's the direction of travel for tax generally — worth embracing
How MMC helps: we set you up on the right software and run it for you. See our Making Tax Digital service for the wider picture.
These factsheets are general guidance, not advice, and rates and thresholds change. For current figures see our tax rates & allowances page, and please contact us for advice tailored to your circumstances.
