What are the Advantages of Online Vat in the UK

HM Revenue & Customs are moving with the times and are encouraging all tax payers to deal with their taxation affairs online via the internet, and VAT is no different. From the 1 April 2010 all businesses with a turnover exceeding £100,000 (excluding VAT) have to submit their VAT Returns online, as opposed to completing and sending in paper VAT Returns. It is not mandatory for business with turnover less than £100,000 to deal with their VAT affairs online, although many are following suit and getting rid of the paper VAT Returns.

There are many advantages in dealing with the business’ VAT affairs online, which includes:

i) It’s quick – After the initial online registration process, which only takes a few minutes in any case, it is simply a matter of logging on and submitting the VAT Return.

ii) It’s secure – HM Revenue & Customs have invested time and money in creating a secure system that protects all users. HM Revenue & Customs claim that all transactions are 100% secure and the encryption is at the highest level. All registered users will get a unique user ID and have to create a password to ensure their affairs remain confidential.

iii) It’s convenient – All registered users can access HM Revenue & Customs’ website at any time, night or day and at a time that suits them. It should be noted that at busy times the website can be very, very slow and will often crash. Therefore, users are advised not to leave submitting returns to the very last minute.

iv) It’s Reliable – Submitting the VAT Return online means not having to use the UK postal system, which can be a bit dodgy at times. There is no way a VAT Return can go missing or get mislaid when it is file online.

v) It’s accurate – There are automatic checks on the VAT Return before submission, which ensures it is arithmetically correct and won’t be rejected for being wrong.

When a business registers for online VAT services there is so much more the business gets and can do as well as submitting the VAT Returns. The business can opt to receive email reminders when important dates become due, the business can view previous online returns, the business can set up a direct debit instruction for payment, the business can submit an EC sales list and the business can inform HM Revenue & Customs of any changes to the business amongst many other things. It is a very useful and highly versatile service.

It is also possible for the business to authorize its accountants as tax agents, which will enable the accountants to access the business’ online VAT account and provide professional help and assistance whenever it is needed. With this service the business’ accountant will never have any excuses not to be aware of what is happening with the business’ VAT affairs.

So, your business is below the threshold for mandatory online registration, however you have considered the pros and cons and decided that dealing with your business’ VAT affairs online is the way forward, but what is the next step? How do you go about setting your business up for online registration?

The online registration process is simple and very straight forward. In order to sign up for online VAT services the following pieces of information will need to be close to hand:

i) The business’ VAT registration number

ii) The postcode of the principal place of business

iii) The box 5 figure from the last submitted VAT Return

iv) The final month of the lat submitted VAT Return

v) The effective date of registration for VAT, i.e. the date the business became VAT registered.

If the business has only recently applied for VAT registration, and has not yet submitted a return it is still possible to sign up for online VAT services. If this is the case, the box 5 figure should read zero and where the process asks for the final month of the last submitted VAT Return you need to put “n/a”.

If the box 5 figure for the last submitted return was a negative figure it should be entered without a minus sign, hence making it a positive amount.

The business will be able to submit any VAT Returns that are due as soon as the registration process is complete, however in order to use the other online VAT services the business has activate the account. In order to activate the account the business owner has to insert an activation PIN, which will be posted to the business’ principal place of business, in an envelope marked ‘Government Gateway’.

The activation code can take up to a week to arrive and it is only valid for 28 days. Failure to activate the account within the 28 day period means the business will have to go through the registration process once more, and wait for a new activation code.

HM Revenue & Customs have a dedicated online VAT help and support team, who can be contacted via email or by phone.

Being able to deal with business VAT affairs online has many advantages for businesses of all sizes and it is something that all business owners should consider doing if they don’t already use the service.