I have been asked by my client if she can switch to monthly VAT because she's finding it a struggle to get the payment together and would rather pay monthly so she knows where she is (retail shop).
Is this fairly easy to switch over and is it done through the ASA portal?
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John
Any advice given is for general guidance and professional advice should be sought applicable to your circumstances.
Hi
I thought you could only change the quarterly stagger via the ASA.
Also my understanding was that you could only go on to monthly VAT if you were in a regular repayment position or if demanded by HMRC (compulsary due to prior payments issues). Or you can pay monthly if on the Annual Scheme via payments on account.
The latter might be an option for your client although most businesses like to keep their VAT as it helps cashflow, but there are a few who cannot deal with it this manner. I have a couple of these and just suggest to (all) my clients that they set up a VAT savings account. One of mine gets paid in quite large chunks so every time her clients pay the VAT equivalent is slung into her savings. 20% is also transferred to a CT savings (I know that is more than necessary but it works for her as that means there is always some extra available for divis/capex spend.
Perhaps your client could transfer daily/weekly based on her z totals?
Worth doing a calculation under the annual scheme - she might not like the first few expected payments though. Also bear in mind any changes for if income goes up or down.
HTH
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Joanne
Winner of Bookkeeper of the Year 2015, 2016 & 2017
Thoughts are my own/not to be regarded as official advice,which should be sought from a suitably qualified Accountant.
You should check out answers with reference to the legal position
With my clients when they've talked about finding the money each quarter, I've tended to suggest opening a second (higher interest) account, and whenever money comes in from sales, transfer 1/6 across to it. When the VAT return is due, the amount to transfer back into the main account to cover it will always be less than that (unless there are zero inputs) so it amounts to a way to save a few quid.
Strictly speaking, it's slightly flawed if the VAT isn't done on a cash basis - but wherever clients have done it, it's tended to work.
Consider: if they feel they can find 1/3 of the quarterly amount to hand over HTML on a monthly basis, then even if the VAT liability is worked out monthly and they remain on a quarterly return, they should be able to put that same amount into the deposit account - even if it's not the full 1/6 of the sales - and this way, they get any interest on it.
The only time it won't work is if they break into the funds before the VAT is due, so there isn't enough left to pay HMRC.
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Vince M Hudd - Soft Rock Software
(I only came here looking for fellow apiarists...)
