Industry sector:

Architect: VAT


Architects and VAT

Architectural services in the UK are taxable supplies, taxable at the standard rate of VAT.

Taxable supplies

You must register for VAT once your taxable supplies have reached the current VAT threshold. You will have to charge VAT on your services - this is known as 'output tax'. You will be able to reclaim any VAT you pay on purchases - this is known as 'input tax'.

If you make disbursements on behalf of a client you do not need to add any VAT when you include these disbursements on your invoice provided you meet the conditions relating to disbursements set out in Section 25 of VAT Notice 700, The VAT Guide.

Every quarter you will pay HM Revenue & Customs (HMRC) the difference between:

  • the output tax you have charged, and
  • the input tax you have paid on your purchases

Nearly all businesses have to pay their VAT bill electronically - for example by direct debit or online banking. HMRC allows you some time at the end of each quarter before you have to pay the VAT due. So, for example, the VAT due on sales made in months one, two and three would be paid at the end of month four. Your VAT return will show your payment deadline date.

Businesses that are having trouble making their VAT payments, or are worried that future payments will cause them problems, can ask for help from the HMRC Business Payment Support Service. If your business needs this financial assistance to tide it over, HMRC will look at your situation and discuss temporary options that could help out. These could include letting you make payments over a longer period and waiving late payment surcharges. To discuss payment problems with HMRC you can call the Business Payment Support Service Helpline on 0300 200 3835.

You can contact the VAT Helpline on 0300 200 3700 for guidance. You can also find out more in HMRC Notice 708 Buildings and Construction which you can download from the Gov.uk website.

Your market research will have helped you to estimate your fee income every month. Now estimate approximately how much VAT you will pay every quarter.

Making Tax Digital (MTD) for VAT

Under HMRC's Making Tax Digital initiative, VAT-registered businesses with taxable turnover above the VAT threshold must keep records digitally and use special software to submit their VAT returns. You can find out more about MTD on the Gov.uk website.

Alternative flat rate scheme

You might be interested in an optional flat rate scheme (FRS) for eligible small businesses. Under this scheme you continue to issue tax invoices to VAT registered customers, but the VAT payable every quarter is calculated as a percentage of your VAT-inclusive turnover. You apply the appropriate flat rate percentage for your type of business. However, this scheme cannot be used with the retail schemes, the margin scheme for secondhand goods or the cash accounting scheme. You can find full details of the FRS, who can use it, and the flat rate percentages in VAT Notice 733, Flat rate scheme for small businesses. It will help you to decide whether or not the scheme is suitable for you.