Published: 23rd Jan 18
Categories: Money, Planning, Taxes
3 Steps to Solving your VAT Payment Headache
3 Steps to Solving your VAT Payment Headache
If you run a small business, you’ll know how much of a hassle VAT can be.
Every financial quarter, independent companies in the retail and service sectors are required to make quarterly VAT payments. In fact, over three-quarters of UK businesses are on a quarterly payment scheme, which means a time consuming review of all company transactions every three months, followed by a payment.
The administration involved in managing VAT calculations and payments is time consuming and stressful enough, but the penalties for making a mistake on your VAT submissions are another cause of worry for independent retailers. Following the submission of your return, you have a month and seven days to pay, but even if you’re slightly late with your submission or your payment, Her Majesty’s Revenue and Customs (HMRC) will put you on a twelve-month surcharge period and any subsequent errors could result in a penalty.
So how can this process be simplified to remove the stress and hassle? There are three steps that any business can take to take the pain out of VAT payments.
1. Employ software to gather the relevant information
Modern online accountancy software has the ability to record and retain all of your business transactions. This is done by connecting your business’s bank account with the accounting software, enabling the recording of all sales and expenses. The software will give you prompts to ensure that the information is reconciled against invoices and expenses, ensuring that you don’t miss any VAT-exempt categories.
2. Use accountancy software to file your VAT return
Smart accountancy software, such as that employed by Virgate Accounts, can also work out your VAT obligation and can even complete the relevant nine-box HMRC form prior to submission. This removes a lot of hassle and time consuming work from your quarterly schedule. All you need to do is check over the form, or have a helpful advisor from an accounts service such as Virgate Accounts do it for you. The form is then submitted entirely online and goes straight to HMRC.
3. Pay your VAT online using Direct Debit
Many businesses in the retail and hospitality sector pay their VAT bill with credit card transactions or bank transfers. These methods can be time consuming as they require you to authorise each separate payment individually, and the process can easily be overlooked. Direct Debit payments are a better option. Once set up with HMRC, the correct VAT payment amount will be taken automatically, so you no longer have to worry about making payments before the deadline or making an accidental error with your bank transfer transaction. As a bonus, the direct debit gets taken from your account on the 10th of the month, giving you an extra 3 working days to keep the cash in your account following the deadline of the 7th of the month.
Cut the time, cut the hassle
It may sound like a dream to hard-pressed small businesses, but it really is possible to automate much of your VAT administration. The technology already exists to make this a reality. By setting up dedicated software, you can cut out all of that laborious manual administration, and have the VAT payments authorised and paid. All you will need to do is carry out a quick check before the returns are submitted.
Of course, not everyone is comfortable setting up new automated processes, particularly when it involves something as important as VAT payments. That’s why at Virgate Accounts, we offer a fully-managed and outsourced finance service that can handle it all.
We can set up and run the software for you, ensuring that it accurately calculates your VAT obligation, and completes the relevant VAT form for submission to HMRC. A quick check of the final figures before they are sent off is all that you will be required to do, and we can ensure that the VAT payments are made automatically and on time through Direct Debit.
Our VAT calculation and payment service is part of our commitment to provide an all-round accountancy and business advice service. We have extensive experience of helping businesses in the retail and hospitality sectors and we can help you to run a better business, by working closely with you and offering consistent, professional support and advice. So why not try automating your VAT calculation and payment service and remove that quarterly administrative burden.