There are a number of VAT schemes aimed at smaller businesses that help to simplify reporting, and in turn reduce the amount of administration time spent on compliance. One is the annual accounting scheme (AAS). But what is this, and when might it be beneficial?

Under the AAS, HMRC permits a business to make one VAT return for a year-long period, instead of the usual four quarterly returns. The business makes advance payments toward the VAT liability for the year, and then reconciles any difference on the annual return….

Some small company owners bring in adult children to take over the day to day running of the business as they approach retirement. There are many strategies used in practice. One may be to appoint the children as directors, while maintaining overall control of the share capital. However, some owners may wish to hand over full control and exit the company altogether and gift the shares to the children as well.

This involves a transfer of value, i.e. the value of the shares being gifted. However, thanks…

Suppose that a business has been paying its suppliers’ invoices for many years without really giving too much thought to the VAT being applied. The business engages an accountant to assist with its VAT returns due to an increase in business activity. The accountant immediately spots that one supplier has been incorrectly charging standard rate VAT instead of the correct reduced rate of 5%. On inspection, this is a long-term issue going back many years.

The business has a problem, because the VAT legislation requires VAT to…

Working from home was slowly becoming more common before the Covid-19 pandemic; however, the various lockdowns restrictions meant that it increased exponentially in 2020 and 2021. Many employees have indicated that they do not wish to return to the office full-time, and employers appear to be willing to acquiesce to requests hybrid working patterns. As a result, working from home is likely to be here to stay. Much of the tax related guidance surrounding homeworking that has come to the fore in the wake of the pandemic relates…

The Omicron variant of Covid-19 saw new guidelines issued by the government in December. However, at the time of writing no lockdown, circuit breaker or otherwise, has been announced. As a result, many businesses will be going ahead with plans for hosting parties for staff and clients. Some may choose not to due to concerns, but may still give festive gifts, for example to the biggest spending customers during the previous year. All these things have VAT implications.

Starting with entertainment, the input tax incurred on any hospitality can…