VAT, or Value-Added Tax, is a consumption tax that is placed on a product whenever value is added at each supply chain phase, from production to the point of sale. The end consumer is the one who ultimately pays the tax in the UK.
If you are a business owner, it is important to be aware of the rules and regulations surrounding VAT. This will make sure that your business complies with the law and avoid penalties. It is also worth bearing in mind that VAT registration can be a complex process, so seek advice from an accountant.
Continue reading to learn more.
Should You Register for Business VAT?
If you’re kickstarting a new business or are unsure about whether you need to register for VAT, it is always best to seek professional advice. However, there are some general rules that you can follow.
In the UK, businesses must register for VAT if their taxable turnover is more than £85,000 in 12 months. This is the total value of what you sell that is subject to VAT minus any VAT you have already paid on purchases from suppliers.
If your turnover is below the threshold, you can still register for VAT voluntarily. This can be rather beneficial if you are selling products or services that are subject to VAT at the standard rate of 20% since you can reclaim the VAT paid on purchases.
When Should You Register for Business VAT?
Businesses can register for VAT anytime, but they must do so within 30 days of their taxable turnover exceeding the threshold. If you register late, there may be penalties awaiting you. Accountants can ensure that you’re properly registered.
Once registered for VAT, you must start charging VAT on sales and pay any VAT due to HMRC. You will also need to submit a quarterly VAT return detailing the VAT you have charged and paid.
What Rules Should be Remembered for VAT Registration?
When you’re thinking of registering for VAT, there are a few rules you should remember. First, if you’re starting a new business, you can register for VAT when you start trading, or you can wait until your turnover exceeds the threshold.
Second, if you’re already registered for VAT, you must notify HMRC if your turnover falls below the threshold. Finally, if you deregister for VAT, your accountant must have this notice, and they must notify HMRC within 30 days.
What Paperwork Should be Remembered for VAT Registration?
The paperwork you need to register for VAT varies depending on the structure of your business. For example, if you’re a sole trader, you’ll need to provide your National Insurance number and VAT registration certificate.
If you’re a partnership, you’ll need to provide your partnership agreement. Meanwhile, you’ll need to provide your company registration number if you’re a limited company. Assess your company type to figure out what paperwork is needed.
Conclusion
VAT registration can be a complex and confusing process, but it’s important to ensure you get it right. With the help of an accountant or a VAT specialist, you can ensure that your business complies with the law and registers for VAT.
Looking for a VAT accountant? Accountants247 Golders Green gets to know your business to help business owners, managers, investors, and other stakeholders. Get in touch with us today!
