VAT in your business
There are three rates of VAT which are applied to goods and services. Standard Rate (currently 20%), Reduced Rate (currently 5%) and Zero Rate (0%). Items may also be exempt (or ‘outside the scope’) of VAT.
So who can register for VAT?
Many believe that only limited companies can register for VAT, this isn’t actually true. VAT registration is also open for sole traders. You can voluntarily register whenever you like, but there comes a point when legally you must register.
When must I register for VAT?
If your turnover is expected to be more than the VAT threshold (currently £85,000) then you will have to register for VAT. You only sell goods or services that are exempt from VAT, but you purchase goods to use in your business to the value of more than the threshold from VAT-registered suppliers in the EU.
When should I start charging VAT?
When your turnover reaches the VAT threshold in a rolling 12 month period, you must start charging VAT from the first day of the second month after you exceed the threshold. When you expect to exceed the threshold in a single 30-day period, you must start charging VAT immediately.
What happens if I don’t register for VAT when I should?
If you’re late in registering, HMRC will retrospectively register your business from the date you should have started charging VAT. You’ll need to add VAT to all sales made from this retrospective date, regardless of whether you actually charge your clients VAT, so you could well lose out if you don’t register when you should. HMRC may also issue you with a financial penalty.
Avoid expensive pitfalls with expert support
Error-free vat returns
T&W Accounts offer expert support on all VAT queries designed to ensure you are compliant and up to date with all of your VAT responsibilities.
Advice on whether you should register with Standard Rate or Flat rate. Standard Rate VAT involves reclaiming VAT on every eligible item you buy or sell. Flat Rate VAT is open to businesses with an expected turnover of less than £150,000 (in the next 12 months).
Reviewing your spending
When reviewing the bookkeeping we pay close attention ensuring all the allowable VAT has been reclaimed by your business, ensuring you are paying the correct VAT.
Since 1st April 2019, all VAT-registered businesses have had to submit their VAT returns digitally, under the government’s new “Making Tax Digital” initiative. We use compliant accounting software and will submit VAT returns on your behalf.
We provide full support to all of our clients if they are investigated by HMRC. We will liaise with HMRC on their behalf answering queries and providing evidence where required.
Here’s what we do exactly
VAT Registration – Advise on Flat Rate or standard Scheme
Unlimited VAT advice – Including cash scheme or accrual scheme
Your VAT calculated, prepared and submitted on a Quarterly Basis
Learn the basics
News & Helpguides
For the eager-to-learn business owners, we have a bank of helpful learning guides and information in our resource centre for you to add to your toolkit.