What is VAT?
VAT or Value Added Tax is a consumer tax placed on goods or services that we buy and sell. There are various VAT rates in the UK but the most common standard rate is 20%. Some goods and services are zero rated and although VAT is applicable it is at the rate of 0%. If your business is VAT registered and the items you sell are standard rated it means you need to add an extra 20% to your price.
Why should I register?
VAT registration becomes compulsory when your businesses annual turnover reaches a certain amount (this amount tends to increase incrementally each year). Because of this, it’s vital you keep a watchful eye on your turnover. You must register the moment you hit the threshold – this is in any rolling 12 months period, not at the end of the quarter or tax year.
In certain circumstances it can be financially beneficial to register for VAT even if you haven’t reached the turnover threshold. We can advise whether this would be the case for you.
What if I don’t register?
If you don’t register for VAT when you hit the threshold (or before!) you’re liable to incur a penalty. This penalty increases the longer you wait to register.
How we can help
If you’re unsure as to whether you may need to register your business for VAT give us a call and we will advise you. If you do need to register for VAT, we are very experienced in dealing with HMRC and can take care of the whole VAT registration process on your behalf.