VAT registration and VAT schemes

What is VAT?

VAT is a tax charged on most goods and services that VAT-registered businesses provide. VAT registered companies need to charge the applicable VAT rate on any services and products you sell.

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Do I need to register for VAT?

You need to register for VAT if your VAT taxable turnover reaches the threshold set by HMRC over a 12-month period. Register for VAT >

Not sure if you need to register for VAT?

Don't worry, you can find out all you need to know from HMRC's website:

• HMRC VAT thresholds and registration >

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Switch on MTD VAT submissions

Before you can submit your VAT Return under MTD, you must switch on the MTD feature in Sage 50 Accounts.

 NOTE: If you create a new company in Sage 50 Accounts v27.2 or above, the MTD feature is switched on by default.

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VAT schemes

Depending on your business, there are different VAT schemes that you can use. HMRC or your accountant can help you decide which VAT scheme is best for you. 

Standard VAT

With Standard VAT, you reclaim VAT when you receive an invoice from your supplier, and you're liable for VAT on sales when you send an invoice to your customer.

To find out how the VAT Return calculates using Standard VAT, check our Standard VAT guide > 

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Cash Accounting

With VAT Cash Accounting, you reclaim VAT on purchases when you make a payment to your supplier, and you're liable for VAT on sales when you receive a payment from your customer.

To find out how the VAT Return calculates using VAT Cash Accounting, check our VAT Cash Accounting guide >

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Flat Rate - Invoice Based

This VAT scheme calculates as a percentage of your total turnover, and you're liable for the VAT on sales when you send an invoice to your customer.

Find out how to account for Flat Rate VAT - Invoice Based >

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Flat Rate - Cash Based

This VAT scheme calculates as a percentage of your total turnover, and you're liable for the VAT on sales when you receive payment from your customer.

Find out how to account for Flat Rate VAT - Cash Based > 

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Other VAT schemes

 These are some of the less common VAT schemes. To find out how to account for each scheme type, click the relevant link below:

• Partial exemption - Invoice based
• Partial exemption - Cash based
• Apportionment retail VAT scheme 1
• Apportionment retail VAT scheme 2
• Point of sale retail VAT scheme
• Direct calculation VAT scheme 1
• Direct calculation VAT scheme 2
• Second hand margin VAT scheme