Do I need to be VAT registered?

Our previous #backtobasics blog article talked about how to get your Limited Company up and running.

One of the next questions a lot of our clients ask is whether they need to be VAT registered or not, and if so, how they go about it. We thought we'd help you out with a little recap:

You're required to register for VAT if either of the following occur:

• the value of your “taxable supplies” exceeds the threshold in a 12 month period
• the value of your “taxable supplies” exceeds the threshold in a single 30 day period

The threshold is currently £85,000 but may change in the future.

Do I have Taxable Supplies?

• Taxable supplies can be standard rated (20%), reduced rated (5%), or zero rated (0%).
• There are other non-taxable supplies, which are known as exempt supplies.
• You could also have turnover which is outside the scope of UK VAT

As a general rule, if your supply isn't listed as reduced rated, zero rated or exempt, then it will be standard rated. More information can be found here, but if you're unsure which type of supplies you are making then please contact us and we will be able to help you.

If you have zero rated supplies, you may wish to register voluntarily (if the value of taxable supplies is below the threshold) – this means that you can recover the input VAT on purchases, even though you do not have to pay across any output VAT on your income.

If you have only exempt supplies, or your supplies are outside the scope of UK VAT, you cannot charge or register for VAT and so cannot recover any input tax.

Some start-up businesses choose to register early i.e. within the first 12 months of trading, before they have breeched the threshold. This means that they can start to recover input VAT sooner rather than risk missing out.

How do I Register for VAT?

You can either ask us to do it for you (as agent) or you can register online and create your own VAT online account at the same time.

It's relatively straight forward to do, and even if you register yourself, we can still complete the quarterly returns on your behalf. Likewise, even if we register you for VAT, you can still sign up for a VAT online account so that you can see information about your previous/current VAT returns.

Once you've made the registration then you should get your VAT certificate in the post – this should be kept safe as it contains a lot of important information, such as your VAT number, your effective date of registration, and the date that your first VAT return will be made up to.

When do I need to submit a return?

Returns need to be made quarterly to HMRC – all returns have to be filed online, although things are set to change from April 2019 with the introduction of MTD.

You have one month and 7 days from the end of the VAT return period in which to file your return e.g. if your VAT period ends 31 March, you have until 7 May to file it.

If you are due to pay VAT across to HMRC then this also has to be paid electronically by the same date – a direct debit can be set up so that HMRC take the payment from you each quarter, which some businesses prefer, as it is one less thing to worry about!

As ever, if you have any queries then please get in touch!