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Value Added Tax (VAT) is a key milestone of running a business. Registering for VAT can be mandatory or voluntary depending on your business’s turnover and nature of goods and services. Here’s what you need to know about VAT registration:
When to Register for VAT
Mandatory Registration
If your business’s VAT taxable turnover exceeds £90,000 in the last 12 months or you expect it to exceed this threshold in the next 30 days, you must register for VAT. This also applies if you are based outside the UK but supply goods or services to the UK.
Voluntary Registration
Even if your turnover is below the threshold, you can choose to register voluntarily. You may wonder why you would choose to register voluntarily, however this can be beneficial for reclaiming VAT on purchases. If you spend as much VAT as you receive it’s definitely worth becoming VAT registered. Discuss this with your bookkeeper to find out what best suits the requirements of your business.
The Registration Process
Most businesses can register online via the HMRC website. This process includes creating a VAT online account which you create via your Government Gateway account.
Information Required
In order to register for VAT online, you’ll need details such as your turnover, business activity, bank account information, and business address.
After Registration
Once registered, you will receive a VAT registration number and must start charging VAT on your taxable supplies. You’ll also need to file VAT returns, typically every quarter.
Reclaiming VAT on Pre-Registration Purchases: You can reclaim VAT on goods and services bought before you registered for VAT, subject to certain conditions:
Goods: Reclaim VAT on goods purchased up to 4 years prior, provided you still have them or they were used to create goods you still possess.
Services: Reclaim VAT on services acquired within 6 months before registration.
Ensure these purchases are for the business now registered for VAT and relate to your taxable supplies. This means they must be used for your business activities that involve VAT taxable goods or services.
Penalties for Late Registration
If you register late, you may be liable for VAT from the date you should have registered. Additionally, penalties may apply depending on the lateness and the amount of VAT due.
Benefits of VAT Registration
Registered businesses can reclaim VAT on purchases related to their business activities.
Being VAT registered can enhance your business’s credibility and can be a requirement for some contracts.
Key Takeaways
– Monitor your turnover to ensure timely registration.
– Understand the responsibilities and benefits of being VAT registered.
– Use the resources available on the GOV.UK website for detailed guidance.
For tailored advice and support with VAT registration, contact KC Accountancy. We are here to assist you with all your accountancy needs.
For more information and personalised assistance, reach out to us at KC Accountancy. We provide expert advice and services to help your business navigate the complexities of VAT and other financial regulations.
