VAT returns

Proactive accounting - the Moola way

At Moola, we believe in being proactive. We don't wait till the last minute and risk mistakes or cash flow surprises. Here's how we keep you up-to-date:

• Ongoing tracking - We track your VAT obligations all year, so there are no surprises come filing time.
• Step-by-step - From registering to filing, we guide you through every step, keeping you compliant and maximising savings.
• Software integration - We use Xero to streamline your financials, track VAT and avoid errors.

We handle all the back-end work so you can focus on what you do best - serving your clients.

How VAT works for you

If you're running an agency or service in the UK, you're likely adding VAT to your prices, but it can be hard to know when to register and how to comply.

• Mandatory registration - If your taxable turnover exceeds £90,000 in a 12-month period, you must register for VAT within 30 days of the month you went over, or when you knew you would.
• Voluntary registration - Even if your turnover is under £90,000, registering means you can reclaim VAT on expenses like office supplies and software, avoid surprises when your turnover climbs, and look more established to clients.

At Moola, our experts guide you through the registration process and make sure you're compliant with HMRC.

Beat the deadlines, save money

Missed VAT deadlines aren't just annoying, they can be expensive. Late filing or payment can result in hefty fines and interest charges. Here's what you need to keep in mind:

• Quarterly or annual - You'll need to file VAT returns every quarter (for most businesses) or annually through the Annual Accounting Scheme.
• Payment deadlines - VAT is typically due a month and 7 days after the end of your accounting period.
• Common pitfalls - Late returns can incur a £400 fine plus further penalties the later it gets. HMRC may charge interest on overdue amounts, and mistakes or omissions can result in fines.

With Moola, we'll keep you on top of VAT, ensuring deadlines are met with no penalties.

Flat rate vs. standard VAT

VAT schemes can be confusing - which is right for your business? Let's break it down:

• Flat rate scheme - This is a simplified scheme for businesses with a turnover under £150,000. Instead of calculating VAT on every sale and purchase, you pay a percentage based on your total turnover. This can save time and admin, but it's not always the best deal for every agency.
• Standard VAT scheme - This scheme requires more detailed record-keeping but means you can reclaim VAT on expenses. If your business is bigger with higher overheads (such as office space and software costs), the standard scheme may work better for you.

VAT for service-based businesses

If you're taking both retainer payments and one-off project fees, VAT can get tricky. Here's where the Flat Rate Scheme can simplify things:

• Let's say you've earned £50,000 in a quarter, with VAT at 20%.
• Without flat rate - You would charge clients £60,000 (£50,000 + £10,000 VAT). You'd need to track all fees and expenses, filing VAT on each sale.
• With flat rate - You would apply a fixed percentage to your total turnover and reclaim the 20% VAT. If your flat rate is 12%, you'd pay £7,200 to HMRC (saving £2,800).

Why it works for agencies: The flat rate scheme can help if you have relatively low costs vs. income. We'll help you decide which scheme suits your model, ensuring you're not overpaying on VAT or missing out on cash flow.