Should You Register for VAT or Not?

by | Aug 17, 2021 | Business Advice, HMRC, Tax, VAT

Should you register for VAT or Not? This article will provide you with enough information to help you make that decision.

You must register your business for VAT when your taxable turnover crosses the threshold within a 12 Month Period. The threshold currently is at £85,000.

You have no choice but to register in the following circumstances if:

  • you expect your VAT taxable turnover to be more than £85,000 in the next 30-day period
  • your business had a VAT taxable turnover of more than £85,000 over the last 12 months

Depending on the nature of your business and the goods or services you provide. You would have to register for VAT from day one.

Taxable Turnover

The taxable turnover is the goods you sell or your services that are not exempt from VAT. These are goods or services which attract standard rated, reduced rated or zero-rated VAT.

Exemption from VAT Registration

If you have had a one-off sale or have crossed the VAT Threshold but believe your turnover in the next 12 months will be below the de-registration threshold of £83,000. You can apply for an exemption from registration through the VAT1 form.

Voluntary Registration

Suppose your business turnover has crossed the VAT threshold of £85,000. It is compulsory to register (unless you are exempt). But, if your turnover is below the threshold. It still may benefit you to register for VAT voluntarily. Is if you sell zero-rated products such as food or books. You will be able to claim back the VAT charged on your purchases.

How to Register

Most businesses can register online through the website. Some businesses will require registering by post, for example, when you’re joining the Agricultural Flat Rate Scheme.

You should get a VAT registration certificate within 30 working days, though it can take longer.

Implications of Being VAT Registered

Once you have registered for VAT, you will need to charge VAT at the applicable rate for the sale of your goods and services from the effective date of registration.

It may benefit you to join one of the schemes to ease the process and reduce the VAT liability due to HMRC. Schemes such as the flat rate scheme for small businesses.

Your VAT Return should be prepared with the associated liability due to HMRC every quarter, complying with the Making Tax Digital rules. Appointing an agent, such as an accountant, can simplify this process, helping you prepare the VAT Return and file it with HMRC on your behalf.

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DISCLAIMER: This article is for guidance only, and professional advice should be obtained before acting on any information contained herein. Thames Williams cannot accept any responsibility for loss occasioned to any person as a result of action taken or refrained from in consequence of the content of this article.