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Taxation & VAT in the UK

Taxation in the UK is a complicated matter, and HMRC – (Her Majesty’s Revenue & Customs) are notoriously “on the ball”. Tax in the UK is paid by everyone, for everything. And it has to be paid before anything else. In times gone by, there might have been a wry grin if a company trading in the UK had managed somehow to avoid paying tax, but after some recent scandals, this is no longer the case. Companies who are trading in the UK who are seen to be dishonestly avoiding paying corporation tax in the UK have done untold hard to their reputation with UK consumers which can only lead to less profits in the future for them. As much as a legal issue, paying tax, especially for large, profitable companies, has become a moral issue amongst UK consumers.

Choosing the right accountant in the UK

If choosing an accountant in your home market took time, effort and the help of friends and business acquaintances, then choosing an accountant in the UK deserves equal attention. You need to find an accountant in the UK who is accustomed to dealing with international businesses expanding a business in the UK. All UK based accountants will belong to one of the formal bodies, and the next step in to work out what you will need your UK accountant to do for you.

It is likely that the UK tax laws will seem complicated to the foreign investor ( as they sometimes do to UK companies). Take extra care to engage a UK accountant who can advise on the intricacies of UK tax law in a way that you are able to understand, and therefore are able to plan for the future, making your business successful in the UK.

Accountancy charges in the UK

Choosing the right accountant in the UK is not down to cost. A good accountant will advise you on UK tax laws, making sure that you and your company are able to operate legally in the UK, and he/ she will also be able to advise you on the most sensible way to incorporate your company in the UK, pay any UK based employees, and pay your taxes in a timely manner .

UK accountancy firms with international experience

Some accountants in the UK have considerable experience working with mid market companies looking to expand their business to the UK and given the rich cultural and linguistic mix of the UK population it will be possible to find a UK based accountant, whether that is a UK based accountant who understands UK tax law and speak Punjabi, or whether that is a UK based accountant who has done a lot of work with Greek companies expanding overseas.

Changes in UK tax laws relevant to international firms

The lax laws change at least twice a year in the UK, and are announced by the Chancellor of the Exchequer. Your accountant should be fully aware of asny changes to UK tax law and be able to advise you accordingly.

How VAT Works

VAT(Value Added Tax) is a tax added to most products and services sold by VAT-registered businesses.

Businesses have to register for VAT if their VAT taxable turnover is more than £85,000. They can also choose to register if their turnover is less than £85,000.

Your responsibilities as a VAT-registered business

As a VAT-registered business you must:

• include VAT in the price of all goods and services at the correct rate
• keep records of how much VAT you pay for things you buy for your business
• account for VAT on any goods you import into the UK
• report the amount of VAT you charged your customers and the amount of VAT you paid to other businesses by sending a VATreturn to HM Revenue and Customs (HMRC) - usually every 3 months
• pay any VAT you owe to HMRC

The VAT you pay is usually the difference between any VAT you’ve paid to other businesses, and the VAT you’ve charged your customers.

If you’ve charged more VAT than you’ve paid, you must pay the difference to HMRC.

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