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Where Taxpayers and Advisers Meet

VAT and self assessment.

UKtrader
Posts: 13
Joined: Sat Sep 16, 2017 9:20 pm

VAT and self assessment.

Postby UKtrader » Mon Sep 18, 2017 1:48 pm

Dear Sir Madam

Last year HMRC VAT department contacted me to inform me that I should be VAT registered business as I went over the threshold four years ago, I was not aware about it I was clueless I thought VAT is for big businesses I am just a sole trader I never heard about the threshold.I had to pay £30000 plus penalties to HMRC to cover what I owed of VAT, unfortunately I made a loss paying this amount as I was in deficit.
As far as I know 20% tax and 9 % class 4 NIC are applied only on net profit after deducting all costs (Tax allowance, stock and all business expenses)
My questions is the £30000 payed to VAT should not be included in my self assessment as profit ? unfortunately I did include this amount. Could you please advise me how to recover the amount that I should not include as profit. Your help is very appreciated

les35
Posts: 566
Joined: Wed Aug 06, 2008 3:09 pm

Re: VAT and self assessment.

Postby les35 » Mon Sep 18, 2017 5:43 pm

You are correct that the additional VAT liability will reduced your direct tax liability. I have dealt with several cases where refunds of tax were necessary. You should talk to your Accountant, and ask him how to adjust previously submitted Tax Returns. Only the VAT amounts will be adjustable, not the penalties.

UKtrader
Posts: 13
Joined: Sat Sep 16, 2017 9:20 pm

Re: VAT and self assessment.

Postby UKtrader » Mon Sep 18, 2017 7:37 pm

You are correct that the additional VAT liability will reduced your direct tax liability. I have dealt with several cases where refunds of tax were necessary. You should talk to your Accountant, and ask him how to adjust previously submitted Tax Returns. Only the VAT amounts will be adjustable, not the penalties.
Thank you for the quick answer, is it necessary to have an accountant or can I just contact HMRC and go from there? Thank you for your help

GlobalTaxAdviser
Posts: 633
Joined: Fri Dec 05, 2014 1:18 am

Re: VAT and self assessment.

Postby GlobalTaxAdviser » Mon Sep 18, 2017 11:54 pm

Hi

If you had an accountant in the first place then you would have probably not ended up with significant penalties and irrecoverable VAT as presumably you may not have been able to charge all or some of the VAT to your customers.

There are other reasons besides VAT that you may consult an accountant - limited company v sole trader, impact of Making Tax Digital, other underlying issues etc. A good accountant may be able to help your business grow as well as save tax.

Kind Regards

GTA

UKtrader
Posts: 13
Joined: Sat Sep 16, 2017 9:20 pm

Re: VAT and self assessment.

Postby UKtrader » Sat Sep 23, 2017 2:26 pm

Thank you for the answer, last question am I registered as VAT business now or not? I paid what I owed of VAT do I have to do anything else ? Thank you

les35
Posts: 566
Joined: Wed Aug 06, 2008 3:09 pm

Re: VAT and self assessment.

Postby les35 » Mon Sep 25, 2017 8:45 am

HMRC will not automatically adjust your income tax, so you (or your Accountant) will have to do this. You are due roughly £30k x 20% = £6k ; so worth doing.


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