When and how to register for VAT with HMRC
Value Added Tax, short, known as VAT. It looks simple BUT in fact, is a very complex side of indirect taxation. Maintaining business records for VAT can be a daunting task for some businesses. We can assure you of quality work on VAT matters and timely submission to HMRC.
We can also help you with your VAT investigations if required.
Let's run through very common Q&As related to VAT
Why do I have to register for VAT?
You don't have to register for VAT straight away once you start a business, as you grow you might reach certain thresholds for compulsory vat registration for example if you are selling goods to EU countries you might have to register for the relevant country's VAT scheme under Distance selling rules or your turnover in the UK reached vat threshold, therefore, have to register. Please contact us for a personalized review on vat
When do I have to register for VAT?
When your total turnover subject to VAT (including Zero-rated supplies) reaches the VAT registration threshold, you need to register by the end of the following month. For example, if your turnover exceeds £85,000 for the twelve months to 30 April 2020, you need to register for VAT by 31 May 2020. Please note that 12 months period is a rolling period and NOT your year-end.
Which software is best for VAT?
There are plenty of options to pick from, please have a look at our Online Accountancy Software section for this.
When do I have to file and pay the VAT return?
You have to normally file VAT returns a month plus seven days from the end of your VAT quarter end date and make any VAT payment too. For example: If your current VAT period runs from Jan 2020 to March 2021 and you pay by Faster Payments, your next VAT deadline will be 7 May 2021.
What kind of VAT scheme should I register for?
This is not an easy question to answer in a few lines, it's best to have an in-depth review of your business first. To name some VAT schemes please see the list below to add more complexity to the puzzle these schemes might carry different basis for accounting i.e Accrual basis or Cash basis.
- Cash accounting scheme
- Annual accounting scheme
- Flat rate scheme
- Standard VAT scheme
- VAT margin schemes
What if there is an error on the VAT return?
Things can go wrong hence HMRC has a tolerance provision for correcting errors on VAT returns subject to certain rules and limitations. Here is the link for more details on VAT Errors Corrections.
What are the penalties for non-compliance with VAT rules?
It can be very costly to intentionally ignore VAT rules or unknowingly can get you into trouble. Please read through this guidance on VAT non-compliance penalties.
I am late for my VAT registration, now what?
It is best to register for VAT on time else it would end up in a late registration penalty. This can be costly BUT prompt action on becoming aware of the delayed situations and contacting HMRC can help mitigate factors for bringing penalties down.
Will the new flat-rate VAT rule apply to me?
Please have a look at our March 2017 newsletter for more details on new Flat rate VAT rules starting in April 2017.
How can I register for VAT and how long does it takes?
It can take a few weeks after your application for VAT registration. You will hear from HMRC via email and in post. If your application gets through for VAT registration, you would receive a VAT number and a certificate showing your VAT periods and VAT registration start date
What about VAT paid on expenditure before incorporation?
You can reclaim VAT on items before you incorporated the company subject to strict rules. In short for Goods its 4 years and Services 6 months. It's not as simple as it sounds, we suggest reading through this guide in detail on reclaiming VAT on Purchases made before incorporation
What about VAT paid before the VAT registration date?
Again it is a similar situation to reclaiming VAT on Purchases made before VAT registration. In short for Goods its 4 years and Services 6 months. Reading guidance in detail is highly recommended.