When do you need to register for VAT?
The questions you need to ask yourself are:
- Has my VAT taxable turnover exceeded the current VAT registration threshold (which is currently £85,000) over the last 12 months*?
- Is my VAT taxable turnover expected to exceed the current VAT registration threshold in the next 30 days?
If the answer is yes to either of the above, then you do need to register with HM Revenue & Customs (HMRC) for VAT.
*This is a rolling 12 month period rather than a fixed 12 month period and thus can be any period.
What are the timescales for registering?
If you exceeded the VAT registration threshold in the last 12 months:
- You need to register within 30 days of the end of the month in which you went over the registration threshold.
- You will be treated as being VAT registered from the first day of the second month after you exceeded the threshold.
- For example if your VAT taxable turnover was £90,000 between 16th May 2018 – 15th May 2019, you would need to register for VAT by the 30th June 2019. Your effective date for registration will be 1st July 2019.
If you expect to exceed the VAT registration threshold in the next 30 days:
- You need to register by the end of that 30 day period.
- You will be treated as being VAT registered from the date you realised, not the date your turnover went over the threshold.
- For example if on the 1st May you realise that your VAT taxable turnover in the next 30 days will exceed the VAT registration threshold, you will have until the 30th May to advise HMRC. Your effective date for registration would be the 1st May.
It is important to note that failure to register for VAT on time will potentially result in penalties.
You will also have to pay the VAT on what you owe from when you should have registered.
Are there any exceptions?
If you answered yes to either of the questions above, but expect your VAT taxable turnover to fall below the current de-registration threshold (which is currently £83,000) in the next 12 months you can apply to HMRC for a registration exception. This is on the basis that your VAT taxable turnover only goes over the threshold on a temporary basis. It is important to note that HMRC ultimately makes the decision as to whether or not you need to register for VAT.
What do I do before I get my VAT registration number?
You need to start charging VAT and include this on your invoices, although this cannot be shown separately. A statement should be added on the invoice advising that an application has been made for VAT registration and a VAT invoice will be issued as soon as a VAT number has been allocated.
VAT of course is payable on this period.
Key VAT responsibilities
From your effective date of registration you must:
- Charge the correct amount of VAT
- Keep VAT records
- Submit VAT returns
- Pay any VAT due to HMRC
- Comply with Making Tax Digital for VAT rules, if your VAT taxable turnover exceeds £85,000.
At Drummond Laurie we are always here to help and if you would like to know more about the VAT or other services we offer, please do not hesitate to get in touch., email email@example.com or call us on 01324 441250.