When Should you be VAT registered?

When to register for VAT

In simple terms, you should register if in the last twelve months you have turned over more than £85,000, and you should do this within 30 days of the last day.

However, if you are trading with VAT registered businesses then you should consider registering anyway because you will be able to claim back the VAT you payout. You can register if you’re turning over less than £85,000.

What does it involve?

You still need to keep your bookkeeping records as before however now you will submit an electronic VAT statement and pay any outstanding VAT. Most accounting software will deal with this as a submission.

You need to be aware that HMRC actively looks for businesses that have an annual turnover of £85,000 or more, as most should be VAT-registered. It gathers information from many different sources, including credit card payments and sales by wholesalers, then analyses that data and compares it to turnover figures declared on tax returns. This data has allowed HMRC to find businesses that are not VAT-registered, but where the turnover indicates they should be. HMRC has been writing to those businesses, asking them to register for VAT or to say why they don’t think they need to be registered.

If you receive one of these letters, you need to respond without delay, as HMRC will follow the letter up with further tax enquires. Please forward a copy of the letter to us as soon as possible, so we can advise you on the approach to take. HMRC’s information about your business may not be completely correct.

If needed, we can help you complete the VAT registration form so that there are no omissions and no errors.