Your firm may be required to register for Value Added Tax (VAT), a tax which suppliers charge consumers when selling products, but only in certain circumstances. In order to help you navigate this complex subject, Turner Little answers five frequently asked questions on VAT registration.
When should your business register for VAT?
You must register for VAT if the value of your firm’s taxable supplies eclipses a specific threshold (£83,000 per year as of 2016/2017). Specifically, you will need to register under two circumstances. If at the close of any month, the value of your company’s taxable supplies during the past year or less surpassed the threshold, you should register. You should also take this course of action if you have grounds to believe that this value will exceed the VAT registration limit over the coming 30 days.
Should you register before turnover reaches this threshold?
Even if your turnover currently sits below the VAT limit, you can still register for VAT via voluntary registration. It can be wise to pursue this course of action if your firm makes most, or all, of its sales to VAT registered firms, as you can reclaim VAT on any business costs you incur. For the same reason, it is also advisable to voluntarily register for VAT if your turnover for this year is too low, but you expect it to eclipse the threshold over the coming year.
Can you back-date VAT expense claims?
Yes, you are legally allowed to reclaim any VAT you incurred before you registered, but these claims are subject to certain conditions. You can take this course of action in two circumstances. You can back-date VAT claims on any services you received up to six months prior to registration, as well as on goods which you bought for your company in the past three years, but which you have not sold on.
Can you avoid registering for VAT?
In most cases, you cannot avoid registering for VAT. HM Revenue and Customs (HMRC) will not let you artificially split up your business to avoid registration. Also HMRC uses every sale, even those brokered overseas, to determine your firm’s VAT obligations. You may not be obligated to register if your turnover has just broken the threshold for the current tax year, but you expect it to remain under the de-registration limit (currently £81,000) the next, if you can provide evidence to support your claim.
How can you register for VAT?
To register for VAT, you will have to complete HMRC’s VAT application form. Unless your firm falls under a restricted list of exemptions, you will need to submit this form online. However you registered, you will then be required to submit quarterly tax returns to HMRC. Registering for VAT can be complex, so you may need expert help. Turner Little provides aid with VAT matters via our corporate services.
Turner Little
Turner Little was founded in 1998 and it has since become a well-established UK based professional Company Registration Agent, Registered Bank Intermediaries and Business Consultants, as well as Trust provider. You can receive our monthly newsletter by signing up using the form below.
