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Getting The VAT Hike Right.

Values Added Tax is the UK government's mechanism for raising tax revenue through sales. It is a relatively new tax that is supposed to only be applied to "luxury" goods; however luxury goods in the eyes of the VAT tax man include items such as adult's clothes and other items that are already highly taxed such as alcohol and cigarettes. There are some items which do not attract VAT such as children's clothes and books. As such VAT represents a relatively high proportion of a household's expenditure.

In January, the standard rate of VAT will be increased from 17.5% to 20%. This is due to the new government's attempt to reduce the budgetary deficit. This increase put more of an onus on businesses to manage VAT more effectively. This is being felt keenly by accountants in Leeds that specialise in small businesses such as RJD Associates as more and more businesses look for help with their VAT administration..

The administration of VAT presents a headache to most businesses. There is a need to keep meticulous records of all purchases and sales in order to keep a track of the net VAT position. These numbers need to be included in the VAT return and any errors could result in fines and charges. With use of an accountant like RJD Associates in Leeds, the business can rid itself of any potential errors that could come their way.

Various VAT schemes are in place to mitigate the administrative burdens of the system for small businesses. One such scheme is the "Flat Rate" scheme. The idea is that a business can forego the right to reclaim the VAT on their purchases in exchange for paying a flat rate percentage to HMRC which will be lower than the standard VAT percentage; this will negate the need to keep detailed records of sales and purchases. That flat rate will depend on the type of business that they operate in.

RJD Associates Accountants in Leeds is one such practise that specialises in the Flat Rate VAT scheme for small businesses. Frequently, the reduced rate more than compensates for the foregone input VAT. The difference between the VAT charged to the client and the Flat Rate percentage can help increase the revenue of the business. HMRC have released the revised flat rate VAT percentages and continue to be generous for some sectors.

RJD Associates are an accountancy in Leeds UK, specialising in helping small businesses manage their accounts, one of our main specialisms is childminders

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