At the end of every business quarter or annually, in some cases, your VAT (value added tax) registered limited company or small business must total all the VAT that customers have been charged, and then deduct the VAT you have charged yourself during business transactions.

You need to register for VAT if your yearly income is over £85,000. For every VAT registered business, a VAT return is mandatory which must be filed quarterly with HMRC, so that they know how much VAT has been paid and received.

A certified tax advisor and accountant can help you file your VAT Returns in a stress-free manner. However, depending on your current income and expenditures, you may not need to make a VAT payment to HMRC, in which case you will be given a refund.

How VAT Registration Works

As a company owner, you need to register for VAT in no more than 30 days once your business turnover has exceeded the threshold above. If you fail to do this, you may be asked to pay a heavy penalty.

As soon as you register, HMRC will provide you with a VAT registration certificate which contains your VAT number, the deadline for submitting your very first VAT return and due payment, and, your effective registration date.

Once you receive the effective date of registration, you need to:

  • Charge the appropriate VAT rate on your goods/services
  • Clear VAT dues with HMRC
  • Submit a VAT return to HMRC
  • Maintain quarterly VAT records and a VAT account

A professional accountant can help you keep all your tax affairs in order, and help you submit your VAT return in an efficient manner.

Why You Should Consider VAT Registration

Registering for VAT entails a number of benefits for your business:

  • Reclaim VAT on expenses through the Standard Rate scheme
  • Register for reduced VAT Flat Rate which will cut down administrative costs associated with preparing quarterly VAT return
  • Working with customers who are also VAT registered means they are already accustomed to the VAT inclusive prices, allowing them to reclaim the VAT.
  • Enjoy more credibility among your customers, the same way incorporating a limited company makes you more professional in the eyes of your customers.

Do I Have to Register? What if I Don‘t?

It is often thought that only limited liability company owners can register for VAT. This isn‘t true since VAT is also open to sole traders.

Bear in mind that you can voluntarily register for VAT whenever you deem appropriate – however, at some point, you may be legally required to register.

One of the conditions for mandatory VAT registration is when you annual turnover is £85,000, as stated earlier. Since this is calculated on a rolling basis, we must account for the turnover in the last 12 months, immediately preceding the current month.

Now, if you have a fairly good idea or have projected that your turnover will reach this threshold soon, you should register at the earliest. Failing to notify HMRC means paying a penalty, which can be easily avoided in the first place. If you feel you are getting closer to your VAT threshold, our professional accountants and tax advisers can guide you on how to register and what the best possible scheme for you may be.

Speak to us today and have a dedicated accountant work out all the intricacies and nuances of VAT registration and returns for you. You can also write to us at should you have any addition questions or concerns.