VAT in Sage Accounting Start

An overview of VAT, common VAT schemes and the VAT Return in Sage Accounting Start.

What is VAT?

VAT is a tax that applies to most goods and services. If you run a VAT registered company, you need to charge VAT correctly on the goods and services you sell.

Making Tax Digital (MTD)

Under the MTD for VAT rules, businesses need to:

• Ensure you have MTD for VAT-compliant software
• Start maintaining digital business records
• Sign up with HMRC for MTD for VAT
• Authorise the connection between your chosen software and HMRC
• Submit your VAT Returns through compliant software

Learn how to get set-up for MTD.

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.

VAT Schemes	Description
Standard VAT	You reclaim VAT upon receiving invoices from suppliers and are liable for VAT on sales upon invoicing customers.
Cash Accounting	You reclaim VAT on purchases when you pay your supplier, and you owe VAT on sales when your customer pays you.
Flate Rate - Invoice Based	This VAT scheme calculates as a percentage of your total turnover, and you owe VAT on sales when you send an invoice to your customer.
Flate Rate - Cash Based	In this VAT scheme, you calculate VAT as a percentage of your total turnover and owe VAT on sales when your customer pays you.
Not Registered	If your company isn't VAT registered, specify this in Accounting.

Find out how to set up VAT.

VAT Rates

In Accounting Start, there are five pre-set VAT rates to choose from:

• Standard 20.00%
• Lower Rate 5.00%
• Zero Rated 0.00%
• Exempt 0.00%
• No VAT

To find out more, read understand VAT rates.

The VAT Return

If you're a VAT-registered business in the UK, you need to calculate and submit your VAT Return to HMRC.

Find out more about how to create and submit a VAT Return.