Should you register your business for VAT?
Many business owners generally misunderstand VAT. While some are obliged to register for VAT, while others can opt to do so of their own accord. So, why might registering for VAT be a good idea, and when should you register?
What is VAT?
VAT stands for value-added tax and it adds to the cost of nearly everything you buy in the UK. If you have a business, you may be required to register for and collect VAT. So it is considered a good idea to get a handle on what VAT is and how it works.
How can VAT affect my business?
You will need to send that extra money to HMRC.
You may require to add VAT to your prices.
You can request for claim back any VAT that you’re owed on business supplies.
How much is VAT?
20% VAT rate for most of the goods and services.
5% is the VAT rate to some energy, healthy, heating, and protective products and services.
0% is applied to a comprehensive range of products and services to do with kid’s clothing, health, building, and publishing.
When do you have to register for VAT?
When to register?
You must go for VAT registration if your VAT taxable turnover goes over £85,000), or you know that it will. Your total VAT taxable revenue is the total of everything sold that is not VAT exempt. You can also register voluntarily.
Compulsory registration
You must register for VAT:
If you assume that your VAT payable revenue is going to be more than £85,000 in the next 30-day period.
If your business had a VAT payable turnover of more than £85,000 for last 12 months.
You may require to register in some other possible cases, depending on the kinds of goods or services you sell and where you sell them.
If you will exceed the VAT threshold in the next 30-day period.
You have to do registration by the end of that 30-day period. Your effective due date of registration is the date you expected, not the date your turnover went over the threshold.
What happens if you fail for VAT registration?
In some cases, if you fail for VAT registration at the given appropriate duration, you could be bound for a late registration penalty charge. Ignorance is not an acceptable case to prevent penalty charges. The longer the duration that you have failed for VAT registration, the greater the charges will be. Moreover, a penalty could get canceled or reduced if you would be able to provide the proof of genuine reasons which prevented you from registration on time.
Ready for VAT register in Coventry? We’ll take you through each step, from what you need before you register to choose your accounting scheme and filing frequency.
