HMRC require you to register for VAT when your sales are over £85,000, based on a rolling 12 month period, or that you expect them to be more than £85,000 in the next 30 days.
When you register for VAT, you’ll be sent a VAT certificate, which confirms your VAT registration number, when your first VAT return is due, and also your effective date of registration, from when you can start to claim back VAT on your purchases and start to charge VAT on your sales.
However, if your sales have not reached £85,000 yet, you can voluntarily register for VAT unless everything you sell is VAT exempt.
When you are VAT registered, you have certain responsibilities:
- Charging the right amount of VAT
- Paying over any VAT due to HMRC
- submitting VAT returns on time
- Keeping VAT records and a VAT account.
See our blog on Making Tax Digital for VAT which is now in force.
During the process of registering for VAT, you cannot charge or show VAT on your invoices until you get your VAT number.
However, if you have passed the £85,000 threshold and are awaiting your VAT number, you’ll still have to pay the VAT to HMRC for this period.
You should increase your process to allow for this, and tell your customers why.
Once you have your VAT registration number, you can then reissue the invoices showing the VAT. Alternatively, if you are dealing with VAT registered businesses, you can issue a VAT only invoice once registered.
Registering for VAT is usually completed online (link here)
By doing this, you’ll register for VAT and also create a VAT online account, (sometimes called a Government Gateway Account) which you’ll need to submit your VAT return to HMRC. (or at least the login credentials to add to your Making Tax Digital for VAT compliance software)
The VAT certificate “usually” arrives within 30 working days.
When you become VAT registered, you are able to backdate claims for VAT paid before registration. The time limits are:
- 4 years for good you still have or were used to make other goods you still have.
- 6 months for services
This can sometimes mean that your first initial VAT return is a repayment.
A large part of the work that we do is working with businesses and their VAT obligations, from VAT registration, optimising the right and relevant VAT scheme, reviewing and or preparing VAT returns for clients, and dealing with VAT De-Registration.
For smaller or newer businesses, the implications of VAT can be quite daunting, so having an expert on hand to guide and/ or take away that strain of managing this Tax can prove a great decision to make.
If you are VAT registered or are contemplating VAT registration, please get in touch to see how we can help.
