You must register for VAT when your VAT taxable turnover exceeds the ‘VAT registration threshold’ of £83,000.
This is calculated on a rolling 12-month basis and is not solely based on your year-end accounts turnover … so please be aware of this!
What happens if I don’t register in time?
If you forget to register for VAT when you should, and register late, you must trace back and pay the VAT you owe from the date you should have registered.
If you sell to the general public, and not to other VAT registered businesses, this could cost you a lot of money, as you will not be able to go back and charge your customers the VAT!
You may also be liable for a late registration penalty.
How much time do I get to register, once I need to?
You must register within 30 days of your business turnover exceeding the threshold. You can do this online on HMRC’s website.
By doing this you will create a VAT online account – you need this to submit your VAT returns online to HMRC.
You should receive a VAT registration certificate within 14 working days.
If you know you are close to the threshold, and think you might have to register for VAT soon, then contact us and we will be happy to help you calculate if and when you need to register.
But what if it was a one off?
If you only exceeded the VAT registration threshold temporarily then you can apply for a registration ‘exception’.
You must write to HMRC with evidence showing why you believe your VAT taxable turnover will not go over the de-registration threshold of £81,000 in the next 12 months.
HMRC will consider your exception and write confirming if they will allow it. If not, they will register you for VAT.
If you would like to discuss any of this further then please get in touch.
Tom Luckett, Accounts & Tax