We’ve all heard the term ‘VAT-registered’, but what does this really mean? This beginner’s guide covers the basics of VAT registration, the potential benefits and the various schemes available.
Do I Need to be VAT Registered?
If the turnover of your company has been more than £90,000 in the last 12 months, or you expect that it will exceed that in the next 30 days, then you need to become VAT registered. Late registration can result in penalties and fees.
Once registered, companies must charge VAT on all relevant sales and submit the tax to HMRC, as well as keep up-to-date VAT accounts. Many companies with a lower turnover actually choose to become VAT registered for the benefits that this offers.
The Benefits of VAT Registration
VAT registration offers a number of benefits to businesses, including being able to claim back the VAT from certain business purchases. It also makes the business appear more established and credible. VAT registration shows customers and clients that you operate at a high level, with good sales and profits.
How do I Become VAT Registered?
The quickest and easiest way to become VAT registered is via your Government Gateway online tax account. It is also possible to do a paper registration using a VAT1 form. It can take up to 30 days to receive your VAT registration certificate.
If you are unsure about any aspect of the process, then Evesham accountants such as www.randall-payne.co.uk/services/accountancy/evesham-accountants/ will be able to assist you with getting VAT registered.
VAT Schemes
Businesses can choose from four basic VAT schemes, which offer different benefits. This includes the Standard VAT Scheme, Cash Accounting Scheme, Flat Rate Scheme, and Annual Accounting Scheme. You can find out more about the various schemes at the GOV.UK website.
Registering for VAT is compulsory for certain businesses, but can even be a sensible choice for those that are not required to register. It’s a simple process for most businesses, but remember to ensure you are registered before your turnover reaches the threshold in order to avoid any late fees or penalties.