As a UK business, you must register for VAT if you are making taxable supplies and your taxable turnover for the last 12 months exceeds £85,000, or you expect your turnover to exceed £85,000 in the next 30 days. Your taxable turnover is the total value of everything you sell that is not exempt from VAT (i.e. labour and materials).
It is important to keep up to date and monitor the level of your turnover if you are close to the VAT threshold. By doing so, you will be able to prepare for when your business is due to go over the threshold and can register on time to prevent any late registration penalties.
You have 30 days from the end of the month in which your turnover exceeds £85,000 to register with HMRC for VAT.
If you are aware that sales in the next 30 days will push your annual turnover above the £85,000 threshold you should register for VAT by the end of that 30-day period.
If your turnover has not exceeded the threshold, you can voluntarily register for VAT and you may wish to discuss this with your accountant.
If you register for VAT late, you must pay the VAT on any sales made from when you should have registered. HMRC may apply a penalty depending on the circumstances.
If your turnover is only temporarily going to exceed the threshold, i.e. you had a large one-off contract, you can apply for a registration exemption. You will need to write to HMRC with evidence that your turnover will not exceed the reregistration limit of £83,000 in the next 12 months.
All VAT registered businesses should be signed up for Making Tax Digital for VAT. Therefore, all VAT records must be kept digitally and VAT returns should be submitted to HMRC using compatible software such as QuickBooks or Xero.
Keeping your records electronically also brings other benefits and can help you keep track of your turnover level.
If you need help with VAT registration, the VAT schemes available to you and help choosing a suitable software solution, don’t hesitate to contact us. Call us today on 0800 0523 555 or fill in our online enquiry form.
Date published 12 Sep 2023This article is intended to inform rather than advise and is based on legislation and practice at the time. Taxpayer’s circumstances do vary and if you feel that the information provided is beneficial it is important that you contact us before implementation. If you take, or do not take action as a result of reading this article, before receiving our written endorsement, we will accept no responsibility for any financial loss incurred.
Catherine Heinen, FCCA
Catherine is a Technical Content Writer at TaxAssist Accountants, and a qualified accountant. With experience working at two accountancy practices in the UK top 50 accountancy firms according to Accountancy Age, Catherine has significant experience in accounts, tax returns and advising clients. Catherine ensures businesses, business owners and individuals are kept up to date and informed by providing concise and informative technical material.
Choose the right accounting firm for you
Running your own business can be challenging so why not let TaxAssist Accountants manage your tax, accounting, bookkeeping and payroll needs? If you are not receiving the service you deserve from your accountant, then perhaps it’s time to make the switch?
We specialise in supporting independent businesses and work with 80,684 clients. Each TaxAssist Accountant runs their own business, and are passionate about supporting you.
We enjoy talking to business owners and self-employed professionals who are looking to get the most out of their accountant. You can visit us at any of our 409 locations, meet with us online through video call software, or talk to us by telephone.
Changing accountants is easier than you might think. There are no tax implications and you can switch at any time in the year and our team will guide you through the process for a smooth transition.