Freelancers can't escape the online-only VAT man

Since April of this year, all VAT-registered businesses with a turnover of £100,000, alongside all new registrants of the tax, have been required to file VAT returns and make VAT payments online.

Although not an issue for all creative freelancers or limited company owners – due to the high threshold, the taxman has recently widened the next, writes Martin McKechnie, a director at The Low Tax Group. In fact, HM Revenue & Customs now says that all VAT-registered businesses must do their VAT returns online and pay VAT electronically from April 2012. This change will no doubt impact a significant chunk of Freelance UK readers.

Somewhat helpfully, HMRC will give you the option of continuing to file paper returns by post if you registered for VAT before April 1st 2010. But from April of 2012, such businesses will have to follow suit, by also going electronic with their VAT returns and payments.

We recommend, as HMRC does, that freelance company owners who have not yet registered should ensure they do so as soon as possible, to ensure they are able to meet their incoming obligations.

If you’re reading this as a VAT-registered freelancer or company that’s yet to act, you can file VAT returns using either HMRC’s online software (free of charge) or commercially-produced software.

However, whichever option you choose, you must have already registered and enrolled for the VAT Online Service before you can submit a VAT return online.

We urge all VAT-registered freelancers to individually explore what HMRC’s plans mean for them, and when, precisely. But it is perhaps those independent businesses which intend to continue filing paper returns – while they still can, who must be extra careful not to forget about preparing to settle up with a VAT man who will eventually be online-only.



20th December 2011

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