Latest 'Looking After Business' column from the Journal

Looking after business, the new business page column from the Carmarthen Journal
By David Butler, director of Clay Shaw Butler, chartered accountants and business consultants of Carmarthen and Porthcawl

It’s usually one of the topics guaranteed to crop up in any business networking event, or even in a casual conversation down the local pub.
You get fixed with a cold stare – and then the question comes: “Now then, David, good boy, tell me what you know about VAT?”
Of course, I could probably talk for Wales on the subject.
But, space in the Carmarthen Journal being at a premium, I will try and be brief . . .
VAT (Value Added Tax) is a tax chargeable on taxable supplies and services made by taxable persons and businesses. Output VAT is charged on applicable sales and Input VAT is reclaimable on applicable purchases. The net amount when one is taken away from the other is the amount payable to/repayable from H M Revenue and Customs.
Who should register for VAT?
You have to register if your turnover is more than £73,000 for last 12 months or next 30 days. H M Revenue and Customs need to be told within 30 days of this threshold being reached. Voluntary registration can also be done if taxable supplies are being made which are mainly zero rated, while input VAT is being suffered on costs borne. A repayment of VAT can then follow.
VAT rates:

• Different rates are applied to different supplies and the rules are strict. All supplies will fall under one of the following rates :-
• Standard rate: 20% All supplies not listed under the other categories.
• Reduced rate: 5% Supplies such as domestic heating, some building conversions etc.
• Zero rated 0% Supplies such as most foods, books etc.
• Exempt: Supplies do not attract VAT and there is a definitive list available of applicable items
• Outside the scope: Do not fall under any VAT rule such as dividends and salaries

What records should you keep?
VAT registered entities need to keep supporting documentation for all VAT returns submitted for at least six years, ready to satisfy any H M Revenue and Customs investigation visit which may occur. Records will include invoice/payments listings and invoices/credit notes which contain at least the minimum information as required by H M Revenue and Customs. A list of the minimum requirements of your invoices can be supplied if required.
The team at Clay Shaw Butler can be contacted on 01267 228500 or through the website at www.clayshawbutler.com