Save towards your VAT liability to safeguard your business.
Receiving an unexpected VAT bill through the post can be stressful for any business but if you save as you go along this can be a thing of the past! We have over 30 years’ of practical experience in providing the license trade with the support and knowledge it needs to build successful businesses, even in the most challenging economic climates.
As a vat registered business your prices will include VAT at the standard rate (20%) even though not everything you purchase will include VAT. Your food sales include VAT at 20% but the majority of food purchases are zero-rated therefore no VAT to reclaim.
Anne Moffat, Director at 2 VAT Ladies explains, “Did you know frozen foods are zero rated in the UK but ice-cream, frozen yoghurt and ice-lollies are subject to standard rate vat? HMRC say these foods are designed to be eaten frozen while the zero-rated category only applies to food that has to be cooked before eaten or defrosted.” She adds “We would recommend you save (in a separate bank account if possible) 10% of your weekly gross turnover, from the first day of trade, towards future vat liabilities. 10% should be sufficient to pay the vat liability for businesses with a wet and food split of up to 60% wet and 40% food. Those businesses with a higher food split should save at least 12% of your gross weekly turnover”.
A business that submits a late vat return or does not make a payment on time may incur a surcharge therefore it is important you save towards your vat liability to avoid additional costs.
Effective planning for vat payments and all other tax liabilities, can give your business the head start it needs in a competitive industry. If you would like a free business review with a member of the 2 VAT Ladies team please call 0121 730 2269 or alternatively email firstname.lastname@example.org.