To claim input VAT paid and to charge customers with output VAT on supplies, It is essential for a business to registered for VAT with HMRC.
Types of VAT Registration
There are two types of VAT registration for which you can go in order to claim VAT on both your sales and purchases from customers and HMRC, respectively.
According to the VAT laws in the UK, a business is essentially required to get it registered for VAT with HMRC if its annual turnover is equal or greater than the set threshold by the HMRC. If the taxable supplies of a business exceed the set threshold in the course of the past 12 months, it becomes essential for it to get a VAT registration number from the HMRC. Currently, this threshold is £85,000. This mode of VAT registration is called compulsory registration. However, if a business doesn’t go above £85000, it is not bound to do so essentially.
Even if a business is expecting to meet the threshold and have strong grounds to exceed the threshold within the following 30 days, you are required for compulsory registration.
You are required to register your business for VAT within 30 days after reaching the threshold. If you fail to register your business in time, you will have to pay at the registration point what you owe to HMRC from the time when you become essential for registration.
A business can also go for voluntary VAT registration even if its yearly taxable supplies are below than that of the set threshold. Voluntary registration will be beneficial for your business when;
– Your business makes 0-rated supplies. Although the output VAT will not be due, you will be able to recover input VAT suffered.
– Your business will be able to make supplies to VAT-registered consumers. In that case, your business will be able to charge customers with output VAR who can recover it from the HMRC. Along with this, you will also get reclaims over your purchases. So at the time to go for VAT registration, it will be vital to consider whether output VAT can be passed on to consumers by raising sale prices or not.
In case if you are getting confused with the things related to VAT registration, don’t panic; we are here to facilitate you in the best possible ways. We will make sure that you are getting the best advice depending on the conditions of your business.
VAT Schemes for Small Businesses
Cash accounting is a VAT scheme in which;
– VAT will be paid on sales when you will recover your money against sales.
– You can reclaim VAT on the purchases when you pay to your suppliers or vendors.
With the annual accounting VAT scheme, you will be submitting a single VAT return every year. It will also minimize the administrative burden that suits all the small and medium-sized businesses.
Flat Rate Scheme:
In the flat rate scheme, the output VAT is calculated by applying fixed rates on the gross turnover of a business, and you cannot reclaim your input VAT. However, the fixed rate is normally lower than that of standard rates in this regard that also varies as per the type of businesses.
Can You Recover Pre-Registration Input VAT?
Yes, you can recover pre-registration VAT input, and 101Accountant is there to assist you in this regard. Input VAT will be claimable on;
– Non-current stock/assets purchased within 4 years before the date of registration, and still, you own them.
– On all the services acquired within 6 months before the date of registration.
What is the Registration process?
Most of the businesses can get themselves registered for VAT through an online portal by the HMRC and can get accessibility to an online VAT account, which can also be used for online VAT return filing later on.
Use An Agent:
You can appoint 101Accountant solicitors as your agents to submit your VAT returns and to deal with HMRC matters on your behalf.
What do You need To Know?
The VAT registration date is also known as the effective date of registration, and you will be required to pay to HMRC due to that date. You are required to provide details like:
– Describe your business’s main activity
– Business starting date
– VAT numbers and Names of all the businesses in which you or directors of your company are involved or beneficiaries.
– Anticipated turnover for coming 12 months
– The trading address of the company
– Director’s full name, NI number, Date of Birth, and current home address and previous as well if the director is living at the current one for less than 3 years.