To VAT register, or not to VAT register: that is the question

Sole Traders and Partnerships

In short, you must register for VAT if your business’ turnover exceeds £85,000 in a rolling 12 month period, or you believe it will in the next twelve months. The turnover is on all items on which VAT can be charged, to find out what this includes speak to your accountant. If you don’t register when you should HMRC may impose penalties for late registration. If your turnover is below this figure it is possible to register voluntarily and in some cases can be advantageous to do so for the following reasons: Impressions matter – One of the classic responses to this question is because of the prestige of being a VAT registered business, clients might think you are too small if you aren’t registered. Do it before it’s too late – If you are a growing business, it can avoid some of the potential issues arising from having to keep track of your turnover constantly to know if or when you need to register. Record-keeping requirements – Yes, you read that correctly; the fact that you now have to keep up to date with your bookkeeping for quarterly VAT filing is a good thing! All businesses are going to have to so this will help you meet HMRC requirements. Reclaiming input VAT – While your business may not be registered, it’s possible that many of the suppliers you deal with are. This means they are charging an extra 20% on top of their goods or services which your business simply has to absorb as a cost. If you register you can reclaim that VAT back. Pre-registration claims – HMRC allows you to recover VAT paid before you register your business for VAT, though you do need to be aware of the time limits and criteria, speak to your accountant for advice on these For more information and identify other aspects to keep in mind, read the full article. If you would like to speak to the team to understand more about VAT registration or you need assistance with it, please contact us.

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