If the following applies to you, you’ll probably have to register for VAT:
- The turnover of your business in the previous 12 months reaches the VAT registration threshold (currently £85,000). Some people choose to register on a voluntary basis if their turnover is under £85,000.
- You think your turnover in the next thirty days will be over £85,000.
If you think you can get around the turnover threshold by operating more than one business, you can’t. HMRC takes the view that if any person operates two or more businesses, all activities will be added together in determining if you need to register for VAT.
You can register online at https://www.gov.uk/vat-registration.
There are advantages in registering for VAT:
- Increased credibility. If you’re not VAT registered it indicates that your turnover is less than £85,000; you may want to give the impression you’re operating at a level above that.
- There could be savings if what you sell is zero rated and you can reclaim VAT on your purchases.
- Again, there could be savings if you supply VAT registered businesses and you’re able to reclaim the VAT on your purchases.
- You’ll need to do quarterly returns. So, it does mean your book-keeping is totally up to date at least four times a year.
In Part 3 of our VAT Basics series, we’ll be clarifying some VAT related jargon.
We regularly hear from our clients that there are too many abbreviations and acronyms. We tend to agree. But until the government changes this, we’re going to try and help clear some of them up for you.
Watch this space…