VAT

What is VAT?

VAT is a tax on consumer expenditure. It is collected on business transactions, imports and acquisitions. Most business transactions involve supplies of goods or services, in your case the supply of Personal Training Services. VAT is payable if they are:

• supplies made in the United Kingdom (UK) or the Isle of Man
• by a taxable person
• in the course of a business and
• are not specifically exempted or zero-rated

What are the VAT rates?

There are three rates of VAT:

• a standard rate, currently 17.5%
• a reduced rate, currently 5% and
• a zero rate

Do these rates apply to all goods and services?

No. Some supplies are exempt from VAT, which means that no VAT is payable. Also supplies are outside the scope of VAT if they are:

• made by a non-taxable person
• made outside the UK and Isle of Man or
• not made in the course of business

When must I register and start charging VAT?

The supply of any goods and services, which are subject to VAT at any rate are called taxable supplies. The current threshold above which you must start charging and paying VAT is ?56,000. This is applicable for taxable supplies in the last 12 months or less.

If the value of your taxable supplies is over a specific limit as above, you need to register for VAT, unless your supplies are wholly or mainly zero rated in which case you may apply for exemption from registration. You may be charged a penalty if you register late.

There are certain circumstances when you might want to voluntary register for vat.

What happens after I've registered?

You need to charge VAT on all your taxable supplies from your date of registration and keep:

• a record of all standard-rated goods and services you supply or receive as part of your business
• a separate record of any exempt supplies you make and
• a VAT account

At preset intervals (typically quarterly) you need to fill in a VAT return with details of your sales and purchases. If the VAT on your sales is more than the VAT on your purchases you pay us the difference. On the other hand, if the VAT on your purchases is more than the VAT on your sales you can claim the difference from us.

The flat rate scheme for small businesses simplifies VAT accounting procedures to save you time and money.

Further help and information

The HM Customs & Excise web site www.hmce.gov.uk provides a wealth of information about vat, the rules, exemptions, processes, forms etc? which will help you find your way around this area. Remember though that unless your taxable supplies exceed the current threshold you don't need to register.

If you are in any doubt or would like further help you can ring the Customs and Excise National Advice Service on 0845 010 9000, they are very helpful.

Please remember that the NRPT cannot offer formal advice on these areas, we can only point you in the right direction, but if you have any questions or would like to speak to someone about vat issues or any other financial aspect of your business then please contact Simon Hopkins on 07884 430 949 or sh@hopkinsconsulting.co.uk, or speak to your usual financial advisor.

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