VAT registration

It is mandatory to register for VAT with HM Revenue and Customs (HMRC) if your business’ taxable turnover is more than the VAT registration threshold.

The VAT registration threshold is currently £85,000 and has been frozen at that level for the next two years until 31st March 2020. This should allow businesses some certainty to plan for how the Making Tax Digital (MTD) timeline will affect them.

Making Tax Digital is HMRC’s radical plan to digitise the way individuals and businesses interact with them and records are kept. Under current proposals, businesses will have to comply with Making Tax Digital for VAT from periods starting after 1st April 2019 if they are VAT-registered and have sales of more than £85,000.

If a business is already using MTD-compliant software, they should not notice much difference to how they communicate with HMRC. However, if a business is still using a cashbook, spreadsheets or non-MTD-compliant software, they will almost certainly need to change their systems.

This is because from April 2019, HMRC will remove the ability to key-in your VAT return figures directly into their website. Instead, the business must transmit its VAT return figures via its bookkeeping or recordkeeping software.

If your business is VAT-registered but has turnover below £85,000 and has voluntarily registered for VAT, you do not need to comply with MTD for VAT in April 2019. You will still have the ability to login to HMRC’s website and key-in your VAT return figures if you prefer, although you can voluntarily register for MTD for VAT. 

Date published 2 Mar 2018

This 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.