If your business’s annual revenue surpassed the VAT threshold—currently £85,000—during the previous 12 months, or if you anticipate it will do so within the next 30 days, you are required to register for VAT.
The 12-month period is a “rolling period,” and thus, it is not dependent on your accounting year or the tax year.
If you purchase a company that has already registered for VAT or if you take over a company whose total revenue exceeds the threshold, you must register.
Here are more details to learn about going over the VAT threshold and where to find a VAT accountant.
Dates For the Deadlines for Registration
There is a precise registration deadline for each of those circumstances.
You must register within 30 days after the end of the month in which you surpassed the threshold if you did so within the previous 12 months. By the first day of the second month after crossing the border, you must register for VAT.
As an illustration, you exceeded the limit on May 4th, 2022. Your registration must be completed by the end of June 2022 to take effect on July 1st, 2022.
You must register by the conclusion of the registration window if you anticipate exceeding the threshold during the 30 days. The effective registration date, however, is the day you realise you will surpass the threshold rather than the day your turnover will exceed it.
For example, you anticipate going over the limit somewhere in November 2022. The registration is valid as of the registration deadline, which is November 30th, 2022. For more details, you can also seek an accounting service to help you out.
Deadline Not Being Met
Law has established these dates, and HMRC scrupulously adheres to them. There are repercussions if you forget that you must register and miss the deadline.
You are responsible for paying any VAT that would have been due as of the relevant date of registration, and HMRC has the right to impose the penalty. The penalty and VAT owed could be significant, depending on how much time passed between realising the error and the registration date.
Penalties For Registering Late
The fine’s size is determined by the amount of VAT you should have collected and the length of time it took you to register.
Even if there is a £50 minimum fee, there are still some consequences for failing to register for VAT on time. After the registration deadline, HMRC will provide you with a written description of any fines or payments you owe and instructions on how to appeal.
Penalties
- 5% of the VAT in addition to the total amount of VAT owing that has been past due for nine months or less after the registration date.
- 10% of the total amount should have been paid between nine and eighteen months following the registration date, plus any unpaid VAT.
- 15% of VAT has been overdue from the registration date for more than 18 months in addition to the full amount of VAT that was due.
Contesting A Fine
HMRC will consider your proposal if you have a solid excuse for missing the deadline. HMRC does not have a set policy regarding the types of justifications it will accept; instead, each circumstance is assessed individually. They may feel that it is permissible in some situations, though.
Suppose you are the only person in charge of managing the firm and conducting tax issues, for example. In that case, you may have been unable to take care of registration on time due to a serious illness in your family or a personal ailment.
Additionally, it could be difficult or impossible to register for or charge VAT at the appropriate time due to business considerations. You might be able to get advice on this and the necessary papers from a lawyer or accountant.
If you decide to appeal, you must contact HMRC no later than 30 days after the penalty is assessed.
Conclusion
It can be difficult and time-consuming to register for and administer VAT, particularly if you unintentionally missed a VAT threshold. Fortunately, you can seek a small business accountant who can help if you need guidance with registration, practical assistance with the registration procedure, or support while appealing. Additionally, by looking at your company’s VAT returns, the accountant can confirm that your VAT codes are active and that everything is in order.
Accountancy247 provides cost-effective, high-value solutions to meet every client’s needs regardless of the size of their business. Contact us if you need a VAT accountant!
