I was reading an article in my paper yesterday about a 10 year long VAT battle between Nectar and HMRC eventually won by Nectar resulting in a VAT repayment of £56 million.

The reason I am telling you this is that I realised how much I take my VAT knowledge for granted and, more importantly, how easy it is for the man in the street to get it wrong leaving him out of pocket. So today I am going to start a series of ‘how to’ VAT blogs starting with advice for set up businesses about registration.

1. Do I have to register for VAT?

You have to register for VAT if the value of your taxable supplies in the past 12 months or less has exceeded the VAT registration threshold for the year commenced 1 April 2014 of £81,000.Take care with this as the threshold is calculated on a ‘rolling 12 months basis’ i.e., when you reach the first 12 months you continue by adding the next month on and removing the first month. You also have to register if the value of your taxable supplies in the next 30 days alone is expected to exceed this threshold. Even if the business has not reached the mandatory registration threshold you may wish to register voluntarily. As strange as it may sound, there are occasions when this will prove beneficial. My advice to you is to contact a VAT specialist to discuss your options.

2. How do I register?

You can submit a hard copy application form (VAT 1) to HMRC but they encourage businesses to register online. You can do and also download a hard copy by visiting www.hmrc.gov.uk

3. Then what happens?

You will receive a registration certificate which will show your VAT number and the date from which you were registered. You must show this VAT number on all of your invoices from that date onwards.

On your application form you will have been asked if you want to complete monthly, quarterly or annual VAT returns and these have to be completed online. The occasions on which you can request hard copy returns are so abtruse as not to be worth mentioning.

As with all things ‘HMRC’ there are strict rules regarding submission dates of the returns and, no surprise, penalties for missing those deadlines. So be aware that you have one month and seven days following your VAT period end to submit your return and pay your VAT. Payment must also be made electronically.

I can’t emphasize enough how easy it is to get into a mess with VAT so, if you have any doubts at all, contact a VAT specialist.

Leave a Reply

Your email address will not be published. Required fields are marked *