09 May Should I register my business for VAT yet?
Are you considering whether you should register for VAT now, or whether you may need to in the coming year?
Take time to think through your options and make an informed decision.
Here are the important questions you need to ask before making that decision about VAT registration…
What is the VAT threshold?
You must register for VAT if your business has a turnover of more than £85,000 a year. If your business is likely to exceed that turnover in the next financial year, it’s worth getting things in place now to ensure you comply when it happens. Even if you haven’t reached that turnover yet, there may be some benefit to your business to register while under the threshold. If the vast majority of your sales are the VAT-registered businesses, registering could allow you to claim VAT on business expenses. This is called voluntary registration.
How often will I need to file a VAT return?
Generally, businesses need to submit a return and any payments to HMRC on a quarterly basis. However, you could join the annual accounting scheme if your VAT taxable turnover is less than £1.35 million a year. That allows you to submit one VAT return a year, but you will have to make payments towards your bill in the months before you receive your VAT return. They are estimated or based on your last return.
Whichever way you submit your return, you will need to be on top of your books when you register.
If I register for VAT will it affect my software?
You will need to file tax returns through software which is compliant with the Making Tax Digital scheme, such as Xero, QuickBooks, or Sage.
You may not be using systems like this as a business operating under the VAT threshold. So, talk to your bookkeeper and accountant as soon as you can to ensure the systems you’re going to be using will enable you to comply with the scheme.
How do I register?
By completing a VAT application form from HMRC which is available online. Your bookkeeper or accountant can help you with this.
What if my business has just gone over the threshold and I expect my turnover to dip back under it again next year?
If you’ve just gone over and expect this to happen, you will have to inform HMRC and then argue your case with them. You may not have to register.
What if all of my business is done abroad?
You still have to register for VAT as all sales are liable for the tax.
What do I need to do to prepare my books?
Ensure they are up to date and include all of your sales to give you a good idea of current turnover and growth trends. Then, sit down and talk through your cashflow and sales projections for the next year with your bookkeeper and accountant.
Why choose Balanced Up Bookkeeping to keep your VAT returns on track?
- We use Making Tax Digital compatible and HMRC-approved accounting software
- We are experienced at using online systems and have a client base of more 250 happy customers
- We keep you in the loop at every stage, ensuring excellent communication, and give you monthly bookkeeping
- We help you ensure your VAT returns are accurate, submitted on time, and get instant submission confirmation from HMRC to ensure you don’t get late fees or have to pay interest