Value Added Tax (VAT) can be complicated if you are a Barrister.
We’ve outlined VAT for Barristers as part of our series of blogs on Barrister accounts, to give you an overview of the options and things to consider.
Which VAT scheme is right for you?
All businesses have to register for Value Added Tax (VAT) when income exceeds £85,000 over a 12 month period.
HMRC produces a VAT Notice 700/44 specifically for Barristers.
There are two choices of VAT scheme - Standard Rate or Flat Rate Scheme (FRS).
FRS was popular amongst Barristers due to its simplicity. Changes from 1 April 2017 mean that it is probably no longer financially efficient, although it is still the simplest calculation. FRS is only open to businesses with a turnover of less than £150,000 a year.
Standard Rate involves reclaiming input VAT on every eligible item purchased and paying over output VAT on income received.
Planning point Although FRS can be quicker and simpler, consider withdrawing from the FRS and moving to Standard Rate VAT. Remember, fee notes issued prior to leaving the FRS can still be charged at the old rate when collected.
Planning point When deciding which VAT method to opt for, remember that “Making Tax Digital” will soon be introduced. Electronic quarterly accounting will be needed by most Barristers, requiring full VAT return information.
VAT on clothing
Because Barristers appearing in court must wear dark suits HMRC permits the reclaim of VAT on suitable dark clothing expenditure (www.gov.uk – ref. VIT 43800), although this cannot be deducted as an expense for Income Tax.
VAT on fuel
Consider carefully if you can benefit from reclaiming VAT on fuel for cars. There is a scale rate deduction which is often greater than the amount claimed.
For more information download our helpful guide to Barrister accounts and taxation.
Need help deciding which VAT method to opt for? Want to know more about how Chambers are organised for VAT?
The views provided in this article are for general information purposes only. Nothing in this article represents advice of any nature whatsoever. Accordingly, RWB CA Limited does not accept any liability or responsibility for the information contained in this article or any decision or other action that may be taken in reliance upon the information contained within it. RWB CA Limited accepts no responsibility for any errors of fact or opinion and assumes no obligation to provide you with any changes to its assumptions.