VAT can be confusing ???? so here’s a little guide to start you off....
????VAT stands for value added tax
????There are different types of rate for VAT, the main one being 20% standard rate which is added to most goods and services.
????The current VAT threshold is £85,000.
????If in the previous 12 months your taxable turnover exceeds the VAT threshold then you are legally required to register for VAT.
????Also if you expect to exceed the threshold within the next 30 days, you must register.
????As a business owner it doesn’t matter whether you’re a sole trader or a limited company, VAT registration is the same for all business types.
????It is your responsibility to monitor your own business turnover ????
????Some businesses choose to register for VAT even if their turnover is below the £85,000 threshold this is known as voluntary registration.
????Advantages to voluntary registration:
* Being able to reclaim VAT on business purchases
* Reclaiming VAT on business purchases you made prior to registration
* Avoiding penalties when you should have registered but you didn’t
* It can boost your business status by giving the impression your business turnover is above £85k
????If you temporarily exceeded the VAT threshold you can apply for Exemption from VAT Registration. You need to write to HMRC and provide evidence detailing why your taxable turnover won’t go over the de-registration threshold which is £83,000 in the next 12 months.
????Once your business is VAT register you will be required to file a VAT return to HMRC at regular intervals.
