How to get VAT Registered and what to consider.
Should I be VAT registered?
The quick answer is yes, if
- Your business services or sales are taxable
- Your turnover (sales) exceeds the statutory registration limit.
Can I register voluntarily for VAT?
Again the answer is yes you can – even if your turnover is below the statutory registration limit.
It can be advantageous for you to register voluntarily if:
- The nature of your trade means that your costs or purchases include VAT, and
- Most of your customers are VAT registered and can claim back the VAT that you will need to add to your sales.
- Or your supplies are mainly zero rated for VAT purposes.
If the answer to the above questions is no then it may be better to delay registration until you have to.
Our Advice regarding VAT Registration Issues:
- Never add VAT to your sales invoices UNLESS you are registered – to do so is a criminal offence!
- Avoid delay if you do need to register otherwise you will incur needless penalties and interest charges, as well as having to pay over VAT which you may not be able to recover from customers.
Special Schemes
Most registered traders simply add VAT, where appropriate, to their sales and pay this over to HMRC, less any VAT input tax paid to suppliers, on a quarterly basis.
For small businesses this can cause cash flow problems. You may have to pay over VAT added to sales invoices that is still not paid by your customers.
To help with this cash flow problem HMRC have created a number of “Special Schemes”. The most helpful are:
- Cash Accounting – If your turnover is within the limits for the scheme you will only need to pay VAT to HMCE when you are paid by your customers. This is a significant advantage for businesses that have to grant extended payment terms to their customers.
- Flat Rate Scheme – Traders eligible to join this scheme can simplify their VAT accounting by applying a flat rate percentage to their sales and paying this amount to HMCE.
- Annual Accounting – With this scheme you agree an annual liability, based on the previous years’ figures, and pay this over on an instalment basis. At the end of each year a final return is submitted and any balance due is paid or overpayment refunded.
- Special Schemes for Retailers – Ordinarily registered traders are required to keep detailed records of every transaction. For retailers this could prove to be a time consuming chore. To avoid this, affected businesses can use one of the schemes set up with retailers in mind.
Please try our VAT calculator located on our website.
How we can help.
Whether you should use any of the special schemes outlined above, or indeed whether you should be registered for VAT or not, depends on your individual business circumstances.
If you are at all unsure how to proceed please call us now on 0800 0523 555 or fill out our contact form and we will call you back.
If you are VAT registered and need your VAT returns completing then we can do these for you.
Printable 'VAT' Page
