Standard VAT rate: 20%
E-Invoicing: permitted, but not mandatory
Reporting: Making Tax Digital – MTD
Digital service tax: no
In the UK, VAT number includes 9 digits and the prefix GB (block of 3, block of 4, block of 2 – e.g. GB999 9999 52).
The standard VAT rate in UK is 20%, with reduced rate of 5% on certain goods and services. Some things are exempt from VAT, such as postage stamps, financial and property transactions.
20% (Standard) – Applies to all taxable supplies, with certain exceptions
5% (Reduced) – Some goods and services, e.g. children’s car seats and home energy
0% (Zero) – Zero-rated goods and services, e.g. most food and children’s clothes
All businesses with UK VAT number must submit periodic VAT reports and payments.
For all companies that operate in the UK, VAT returns must be submitted on a monthly, quarterly, or annually basis, depending on the accounting period chosen by the business entity.
Monthly – 1 calendar month and 7 days after the reported month ends
Quarterly – 1 calendar month and 7 days after the reported quarter ends
For 1 or 3 months, entity must submit the returns and pay tax within 1 calendar month and 7 days after the accounting period ends.
According to the governmental website, HMRC (Her Majesty’s Revenue and Customs) can charge penalties for non-compliance of up to:
Penalties for late payment of VAT are as follows:
Full VAT invoices issued in the UK must contain the following:
The Ministry of Defence and HMRC (Her Majesty’s Revenue and Customs) use eInvoicing extensively.
England – Some local authorities have individually implemented electronic invoicing solutions as part of their procurement activities. In January 2016, NHS (National Health Service) introduced mandatory electronic invoicing for the entire NHS.
Scotland – The Scottish Government is providing a national electronic invoicing solution through PECOS P2P and any Scottish public sector organisation can implement the solution regardless of the P2P or finance system in use.
Wales – currently working on the model of electronic invoicing.
In general, electronic invoicing is permitted, but not mandatory at this moment.
MTD is a compulsory system of online tax filing, that is to be fully introduced by 2020-2021.
According to governmental web pages, VAT-registered businesses with a taxable turnover above the VAT threshold (£85,000) are required to follow the Making Tax Digital rules by keeping digital records and using software to submit their VAT returns.