VAT Registration
Need advice on whether to register for VAT?
What is VAT registration?
VAT registration is the process of registering your business with the government as being active in production and sales. VAT (Value Added Tax) is a type of business tax that is added to many products and services that are sold by VAT-registered businesses, currently at a rate of 20%. In the UK, a business must register for VAT if their VAT taxable turnover over the last year exceeds £90,000, or if the £90,000 compulsory VAT registration threshold will be exceeded within the next 90 days.
You must also register for VAT if you and your business are based outside of the UK, and provide goods or services to the UK from overseas companies, regardless of if your turnover exceeds £90,000 annually. Once your business hits the VAT threshold, you must register for VAT, and you must comply with ‘Making Tax Digital’ (MTD). MTD is a strategy implemented by the government for businesses and individuals to keep digital records and submit quarterly updates instead of annually, eventually decreasing tax losses due to avoidable errors. Digital records must now be kept for VAT-registered businesses, with tax returns and business records being sent directly to HMRC via digital software.
Alternatively, if your business turns over less than £90,000 annually, you can decide to apply for VAT registration yourself, known as voluntary registration.
Why you should register for VAT
There are several benefits to voluntarily registering your business for VAT including being able to reclaim the VAT on purchases made for the business, and also appearing to be a bigger, more successful business by charging it, as most businesses only pay it at the compulsory threshold of £90,000.
Another significant benefit to being VAT registered is the ‘flat rate scheme’. The ‘flat rate scheme’ entails paying a fixed rate of VAT to HMRC and allows your business to keep the difference between what your customers are charged, and this flat rate to HMRC; this is to reduce the administrative costs for smaller businesses and allow for small business growth.
Who Are Hayvenhursts Chartered Accountants
Hayvenhursts Chartered Accountants is an accountancy firm based in Cardiff, South Wales. We offer a wide range of financial services, with extensive experience in several areas such as personal tax, business tax, VAT returns and financial management.
We offer services to both private individuals and business owners alike, offering payroll and PAYE services, annual accounts preparation, business valuations, tax planning services and company secretarial services. We recognise that being a company director or sole trader can sometimes be fairly overwhelming, so offer a business growth service, where we can aid you in creating a business plan to reach your business goals, all alongside liaising with HMRC to take tax planning and reporting obligations off your plate.
Regardless of your financial or accounting needs, our team at Hayvenhurts promise to speak to you simply, without complicated legal or financial jargon. We prioritise always being contactable to our clients and providing fair and affordable accountancy fees. Give us a call to discuss your accounting needs and relieve the administrative burden of your business at Hayvenhursts on 02920 777 756 or contact us here.
How Hayvenhursts can help you with VAT registration
At Hayvenhursts, we appreciate that it may be confusing to decide whether or not to become VAT-registered if your South Wales business is not currently required to do so. We pride ourselves on offering all of our potential clients a free VAT Healthcheck and free advice consultation. Our team can also offer free MTD and VAT appraisals, and can also help you with the following:
- Advising you on whether we think it would be beneficial for your business to register for VAT
- Advising you on the best VAT schemes that may be beneficial and suitable for your business (some require notifying HMRC and some do not)
- Assistance with VAT registration forms and the relevant formalities in regard to VAT regulations on your behalf, including aid with records for VAT purposes
We also recognise that becoming a VAT-registered business will bring with it more paperwork and administrative work to your business, so we also offer complementary services such as:
- Completion of VAT returns, or can offer training on how to complete them correctly
- Assistance with MTD digital records
- Advice on VAT planning
- Aiding with any potentially contentious disputes with Customs due to an overseas business
- Attendance at VAT inspections
Our accountants at Hayvenhursts Chartered Accountants have years of experience in assisting with the VAT registration of businesses in Cardiff and the rest of South Wales and are experts in VAT regulations. Our competitive and cost-effective accounting fees and excellent level of customer service result in our clients returning to us year after year for their VAT registration and VAT planning requirements. If you need assistance or support with registering your business for VAT or need advice as to whether your business needs to be VAT registered, then get in touch with our team for a free consultation by calling us on 02920 777 756 or using our contact form here.
VAT FAQs
Do I need to be VAT registered?
You are only obligated to be VAT registered if your business’s annual turnover exceeds the VAT threshold of £90,000 in a 12 month period, or if you exceed the threshold in the next 30 days. You would also need to be VAT registered if you and your business are based outside of the UK, and you provide goods or services to the UK. If you do not meet this criteria, then you do not need to be VAT registered.
Is the first £90,000 VAT free?
If your business’ annual turnover is less than £90,000 then you don’t need to register for VAT, and you do not need to charge VAT on the products or services you provide.
Does it cost me to be VAT registered?
No, there is no cost to registering for VAT, as it is free on the HMRC website, however, an accountant will charge you fees to do this for you.
How much turnover does it take to be VAT registered?
Your turnover must be over £90,000 in a 12-month period, or exceed £90,000 in the next 30 days for you to be obligated to register for VAT. However, you can apply for voluntary VAT registration if you turnover less than this, and believe it would be beneficial for your business.
Do small businesses get VAT back?
If you are VAT registered, you can reclaim VAT on products and services that form part of your business expenses – you cannot get VAT back on purchases made for you personally or in the instances of hospitality or client entertaining; you also cannot reclaim for certain services such as insurance.
Do I need an accountant to register for VAT?
No, an accountant is not a requirement for VAT registration, however, it can be useful to have one for assistance with the relevant paperwork and preparation and the ongoing VAT records that will be needed going forward.
Is it illegal to charge VAT if not registered?
Yes, you must not charge VAT if you are not VAT-registered. Businesses that issue an invoice including VAT can be charged a penalty of up to 100% of the invoice amount in accordance to the Finance Act of 2008. This penalty also applies to errors made in ignorance, as they are still found to be VAT infringement.
What are the Different VAT Schemes in the UK
Value Added Tax (VAT) can be complex, but choosing the right VAT scheme for your business can simplify your accounting processes and even save you money. Here’s a brief overview of the main VAT schemes available in the UK:
VAT Flat Rate Scheme:
• Who is it for? Small businesses with a VAT-taxable turnover of £150,000 or less (excluding VAT).
• How does it work? Instead of calculating VAT on every sale and purchase, you pay a fixed percentage of your total sales to HMRC. The rate you pay depends on your industry, which simplifies your bookkeeping and can sometimes result in lower VAT payments.
VAT Annual Accounting Scheme:
• Who is it for? Businesses with a VAT-taxable turnover of up to £1.35 million.
• How does it work? You make advance payments towards your VAT bill throughout the year, based on your previous year’s VAT liability (or an estimate if you’re new). At the end of the year, you submit a single VAT return and settle any difference. This scheme can help with cash flow management by spreading payments over the year.
VAT Cash Accounting Scheme:
• Who is it for? Businesses with a VAT-taxable turnover of up to £1.35 million.
• How does it work? You only pay VAT to HMRC when you receive payment from your customers, and you can reclaim VAT on your purchases only when you’ve paid your suppliers. This can be beneficial for cash flow, especially if your customers take time to pay.
VAT Margin Scheme:
• Who is it for? Businesses that deal in second-hand goods, antiques, art, or collectables.
• How does it work? You only pay VAT on the difference (or margin) between what you paid for an item and what you sold it for. This scheme is useful for businesses where VAT on the purchase price of goods is not reclaimable.
VAT Retail Schemes:
• Who is it for? Retailers who sell a wide range of goods find it impractical to account for VAT on each sale individually.
• How does it work? There are different methods under this scheme, but generally, it allows retailers to calculate VAT based on a proportion of their total sales. This can simplify VAT calculations, especially for businesses with a high volume of low-value sales.
How Hayvenhursts Accountants Can Help
Choosing the right VAT scheme depends on your business type, turnover, cash flow needs, and the complexity of your transactions. Hayvenhursts Accountants can guide you through the options, ensuring that you select the most beneficial scheme for your business. We can help with the setup, compliance, and ongoing management of your VAT obligations, allowing you to focus on growing your business. Let us simplify VAT for you and make sure you’re not paying more than you need to.
For VAT registration we can assist with...
- Advising if you need to or if it would be beneficial to register
- Completion of the VAT registration forms and formalities
- Advising on the best VAT schemes to use suitable to your business - some you have to notify HMRC you are using and some you don't
In addition we can assist with...
- Completion of VAT Returns or training on how to complete them
- VAT planning
- Dealing with any contentious disputes that arise with Customs
- Attendance at VAT inspections
For advice, guidance and information on VAT registration or assistance in making VAT Returns or making tax digital feel free to contact your local Cardiff-based experts.
Next Step:
Please contact us if you need further advice, have any questions about our services, or would like a free consultation.