The VAT tax can be a little tricky to understand, especially if you are a new business. That is why you must hire the best accountants in Balham to help you through this process. However, it is important to know when your business will require VAT registration.
Here is a short guide to help you understand when your business needs to become VAT registered.
When Do You Need To Register Your Business For VAT
As a general rule of thumb, you must register for VAT when:
- You expect the business turnover to go more than £85,000 in the next month
- The total turnover of your VAT taxable was more than £85,000 in the last year
- Your business is outside the UK
- You are also based outside the UK
- You supply any type or services or goods to the UK or expect to in the next month
By a month, we mean you have to do it in the next thirty days. There is also an option of voluntary registration if your turnover is less than the amount stated above. You will have to pay the HMRC the VAT you owe from the date you have been registered with them.
What Happens If You Register Late For VAT?
If you register late for your VAT, you will have to pay VAT on all the sales you have made from the date you should have registered on. Besides that, the HMRC might also ask you to pay a penalty. However, this depends on how late you register for the VAT and how much you owe them.
Not all businesses have to register for VAT. Here is what you need to know about it:
- Some businesses are exempt from VAT. These include finance and insurance business
- Not all of the income from your business will be counted towards the threshold of £85,000. For example, you might have an income from overseas, which you might need to count
That is everything you need to know about late registration or not registering your business at all if you are exempt from VAT.
How Do I Calculate My Turnover?
The turnover of your business will be the total value of everything you offer for sale that is not exempt from VAT. These include:
- Business goods you have used for personal reasons
- Goods you have as gifts or bartered
- Zero-rated goods
- Goods you loaned to customers
- Goods you hired
- Building work of more than £100,000 your business did
- Services you have received from businesses outside the country that you had to reverse charge
That is everything you needed to know about when to register your business for VAT. We recommend that you hire an accountant if you have the budget. They will do the registration for you and ensure that everything is complying with the law so that you don’t have to face any issues later on.