VAT

VAT Registration, Records & Returns

VAT registration, records and returns

VAT registration is legally required if your VAT-taxable turnover exceeds the VAT threshold (£81,000 from April 2014) or is expected to do so in the next 30 days alone. You may also choose to register if you think this will be advantageous to you.

VAT-registered businesses must keep proper VAT records and issue VAT invoices to their customers. You also need to complete VAT returns, typically quarterly, and pay HMRC any VAT you owe them.

All VAT-registered businesses must send their VAT returns online and pay their VAT electronically.

VAT Planning

VAT planning

VAT returns and record-keeping can be time-consuming. Smaller businesses may be able to reduce the paperwork (and in some cases their costs) by opting for one of the simplified VAT accounting schemes.

If you aren’t required to register for VAT, you can avoid the paperwork. But it may be worth registering voluntarily if you pay significant amounts of VAT on your purchases. Provided your customers do not mind being charged VAT (eg if they are VAT-registered businesses) and you do not sell exempt supplies, registering will allow you to reclaim the VAT you pay.

There can be added VAT complications, for example, for businesses that sell VAT-exempt supplies, for company cars, and for purchases of supplies that are also used privately. Different VAT rules also apply for international trade. It’s worth taking VAT advice, particularly if any of these apply to you.

Finally, it’s worth mentioning that VAT problems are not uncommon and you should also expect a VAT inspection by HMRC from time to time. You should certainly take advice if you have any concerns relating to VAT.