Registering for VAT is a must if your turnover reaches a certain level; it’s part of your role to ensure that your business is suitably prepared and aware of when the registration needs to be made.
The VAT registration threshold is £85,000 – meaning that once your turnover crosses this level, in a 12 month rolling period, you may have to register for VAT. This can be a big change for a business and needs serious consideration as to the effects it can have.
A failure to comply with the HMRC rules to register on time can lead to penalties which soon tally up and leave you considerably out of pocket.
The penalty is worked out as a percentage of the VAT due, from the date when you should have registered to the date that HMRC either receive your notification or become fully aware that you were required to be registered. The rate of penalty depends on how late you were in registering:
|If you registered:||Then the penalty rate will be:|
|not more than 9 months late||5%|
|more than 9 months but not more than 18 months late||10%|
|more than 18 months late||15%|
There will always be a minimum penalty of £50.
If you feel that your business could be approaching the VAT turnover threshold then get in touch so that we can help. 0116 2423400
Brook Lucas, Accounts & Tax