Lately, VAT has been one of the most talked-about subjects among many types of professionals and their tax accountants. This is because there have been targeted changes in VAT regulations during the past few years, and small business owners and service providers want to understand what it’s all going to come down to when the dust settles.
If you are an optician running your practice in any part of Britain, you need to learn about the latest VAT regulations that may affect your industry.
VAT FOR OPTICIANS
If you are a working optician, it is highly likely that your customers get a combination of products and services from you. Some of the services you offer may be exempt from VAT, but most of the goods involve the standard VAT rate, which is 20% at present.
In other words, calculating applicable VAT for every return, you are required to submit could be a bit nerve-racking. There is also the added complication of mixed-use or partially exempted supplies.
Here’s a simple enough example of why it could be difficult to calculate your VAT at the end of each VAT period. Suppose a customer gets spectacles from you after you’ve measured their eyesight.
According to currently applicable VAT regulations for opticians, this transaction has two elements. The provision of professional optical services is exempt from VAT, while the supply of spectacles are subject to VAT at the standard rate. As such, you will need to apportion your VAT accordingly.
INPUT AND OUTPUT TAX IN VAT FOR OPTICIANS
As you may already know, you are required to register to HMRC for VAT once your taxable revenue crosses the VAT threshold.
Once that happens, you will be required to charge VAT from customers on all the standard-rated goods and services that you provide, and this tax that you collect is called the output tax in VAT terminology.
On the other hand, you will also be paying VAT for a lot of the purchases you make. A business registered for standard rated VAT is eligible to reclaim all of the VAT, and this is called the input tax.
Either you are expected to pay the difference between the two to HMRC for every VAT period, or you may be eligible for a refund from HRMC for overpaid VAT.
OTHER HMRC REQUIREMENTS FOR VAT COLLECTION
Businesses in the vast majority of industries are required to pay their VAT electronically. Since this could be a complication for some business owners, HMRC allows some time past the due date for them to use online banking or direct debit to pay their VAT bill.
Since HMRC is executing its Making Tax Digital (MTD) idea, they also now require VAT registered businesses to keep their records safe digitally and start using specialised software programs to file their VAT returns. Please refer to our blog on MTD for more details.
RESOURCES FOR HELP
HMRC has itself set up several resources and support centres where opticians can call to get the information and answers they need for their VAT eligibility and payments/refunds.
However, as with all other tax-related issues, getting professional advice from a seasoned VAT accountant is the best option for every business registered for VAT in Britain.
If you are an optician and have any questions regarding VAT, feel free to get in touch with us.