If you are a business owner, organising your finances is vital to business growth. A key aspect of setting up a business is dealing with VAT.
At some stage most businesses will have to register for VAT, or at the very least understand how it affects their operations.
When should you register for VAT
If your total VAT taxable turnover for the last 12 months was over £85,000, which is the VAT threshold, or if you expect to go over £85,000 in the next 30 days, you need to register for VAT.
If you do not register, and your business goes above this threshold, you could be faced with a large fine.
In order to calculate your turnover, you should include the value of everything your business sells that is not exempt from VAT.
This can include business supplies used for personal use, goods hired or loaned to customers or given as gifts and part-exchanged goods.
You will need to consider which VAT scheme is most suited for your business. It is best to seek professional advice on this as it will affect how you record, report and reclaim VAT.
How to register for VAT
You can register for VAT online. To do this, you will need a Government Gateway user ID. Once you register, you will then have a VAT online account to use going forward.
You can also fill in a paper VAT1 form.
When you register, you must ensure that you have your business contact details, including your turnover and the nature of your business. You will also need bank account details and your Unique Tax Reference (UTR) number.
Once registered you will be required to comply with the reporting and recording requirements of Making Tax Digital for VAT, which includes providing quarterly VAT updates to HM Revenue & Customs each quarter.
If you need advice on related matters, contact us today.
Chat with us