• Email this page to a friend
  • Share on LinkedIn
  • Share on Twitter
  • Share on Facebook

Call us on 02920 777 75602920 777 756

WE KEEP YOUR FINANCES
RUNNING SMOOTHLY, LEAVING YOU
TO FOCUS ON RUNNING YOUR BUSINESS.

WE KEEP YOUR FINANCES
RUNNING SMOOTHLY, LEAVING YOU
TO FOCUS ON YOUR BUSINESS ADVENTURE.

CONTACT US TODAY
TO LEARN HOW WE CAN HELP
YOU FIND SUBSTANTIAL TAX SAVINGS

DO YOU GET A SINKING FEELING
EVERYTIME SOMEONE MENTIONS TAX?

Find out how to Make more, Keep more and Work less

Book a Free Consultation

Request a Callback

VAT Benchmarking

Newsletter issue - February 2015

HMRC are currently writing to around 7,500 furniture retailers and car repair businesses asking the owners to check the figures reported on their VAT returns. If you receive one of those letters, don't panic. HMRC do not believe your VAT return is wrong, they are just asking you to double check your sales and purchase figures.

The HMRC letter asks you to work out your VAT mark-up ratio by comparing the difference between your sales and purchases (i.e. gross profit), as a percentage of the total of the purchase costs as reported on your VAT return.

HMRC then asks you to benchmark your VAT mark-up ratio to the standard ratios for your business sector, which are provided in the letter. It suggests you should calculate the VAT mark-up ratios from VAT returns submitted in the last 12 months, and compare those to the standard mark-up ratios for your trade sector. If your VAT mark-up ratio falls outside the standard range, you should review the figures to be included in boxes 6 and 7 on your next VAT return.

This all sounds very complicated, and it is. HMRC are trying to bamboozle you with ratios and percentages. In fact you are not obliged to do anything in response to HMRC's letter. It does not ask for a reply and it is not part of a tax investigation.

If you would like us to double-check the amounts reported on your VAT returns we would be happy to do so. Sometimes it is a good idea to do a random check that no sales or purchases have been left out accidentally.

 

Commercial Property

Reduce your SRA audit outlay

How to choose an accountant