Date posted: 9th Aug 2021
VAT registration – what does it mean?
If you are trading, then you must register your business for VAT purposes if your VAT taxable turnover (see below for a definition) exceeds the current registration threshold of £85,000.
You must register if:
- at the end of any month, the value of your VAT taxable supplies in the previous 12 months (or less) is more than £85,000; or
- at any time if you expect the value of your taxable supplies in the next 30 day period alone to exceed £85,000.
VAT taxable turnover
The VAT taxable turnover is the total value of sales that are not exempt from VAT. Thus, you should include sales that would attract VAT at the standard rate, the reduced rate or which are zero rated, but not sales that are exempt from VAT.
Exception from registration
If you exceed the VAT registration threshold but believe that your VAT taxable turnover will not exceed the deregistration threshold, currently £83,000, in the next 12 months, you can apply t0 HMRC for an exception from registration. This may be the case if you have a one-off sale that is particularly large and takes you over the VAT threshold as a one-off.
Registration is compulsory if your VAT taxable turnover exceeds the registration threshold (unless an exception applies). However, if your VAT taxable turnover is below this level, you may choose to register for VAT voluntarily. This can be advantageous, particularly if you supply goods that are zero rated (such as food) as it will enable you to reclaim any VAT that you pay on purchases. In addition, voluntary registration can help give the impression that your business is larger than it may be, which could be advantageous when it comes to competing with larger businesses, for contracts.
How to register
Most businesses are able to register online on the gov.uk website. In certain cases, registration must be done by post, for example, if you apply to join the agricultural flat rate scheme.
You will receive a VAT registration number once you have been registered for VAT. You should receive a VAT registration certificate within 30 days.
Implications of being VAT registered
Once you have registered for VAT, you will need to charge VAT at the appropriate rate on any sales that you make. You will also be able to reclaim any input tax that you suffer on purchases.
You may choose to join one of the schemes to simplify the process and reduce the associated VAT return, for example, the flat rate scheme for small business.
You must also file VAT returns each quarter and pay any VAT owing over to HMRC and importantly, comply with Making Tax Digital for VAT.
How we can help?
We are well versed in VAT matters and can help you comply with Making Tax Digital.
If you need assistance with any VAT matters, please give us a call or contact us here.