VAT Registration - make sure you register on time!
It is surprising how often I hear or read of a business owner whose turnover has exceeded the VAT registration threshold without their knowledge.
If you register for VAT late, you have to account for VAT on all your trading income from the date you should have registered, even if you have not charged your customers VAT. In addition there are penalties for late registration for VAT, calculated as a percentage of the unpaid VAT. This could mean paying over a considerable proportion of your income to HMRC.
Compliance with the HMRC requirement to keep records up to date (see business record checks) should help to prevent this happening and save business owners the stress and anxiety associated with reporting and dealing with late registration.
By keeping your accounts up to date you are in a much better position to
· know when you should register for VAT
· plan and prepare for VAT administration and accounting
· ensure you have the correct documents to enable you to reclaim VAT on your purchases
· allow you to add the appropriate VAT to your sales invoices
It’s also worth researching the VAT rules which would apply to your business if you did register for VAT. For example– EU and worldwide trading zero rated and exempt supplies, and to find out of there are any special VAT schemes which would make VAT administration easier for you.
Be aware of your turnover for VAT purposes:
The VAT registration threshold increased from £79,000 to £81,000 in April 2014. If at any time your turnover for the previous 12 months exceeds this threshold, or you expect it to go over that figure in the next 30 days alone you should register for VAT. It should be noted that if your turnover exceeded the threshold before April 2014, but you didn’t know until after April 2014, then the earlier threshold will apply.
If you would like a free VAT Turnover Checker spreadsheet, to help you keep an eye on your rolling 12 months turnover, please contact me.
There are many other factors to take into account when considering VAT registration. It is advisable to seek the guidance of an accounting professional at an early stage.
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