Simmers & Co
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register for VAT?
question could mean two things: "Do I HAVE to register for VAT" or
"Should I CHOOSE to register for VAT".
- You must register for VAT of
your annual turnover is in excess of £79,000. This means that if, in ANY
12 month period your turnover exceeds this figure, you have little choice
and must register for VAT. (There are some circumstances, however, where
this is not so and, if you are in doubt, you should seek professional
help.) If you are not registered for VAT you must, therefore, keep a note
of your turnover on a rolling 12 month period and register when you feel
you may exceed £79,000. There are time limits in force and you should
check these with your VAT office or seek professional help.
- If your turnover is below
the limit for registration (£79,000), you may, if you feel it is
beneficial, apply to register for VAT. This is known as Voluntary
Registration. Whether you should do so or not depends on many things, but
you should decide with care (in fact we feel you should seek professional
assistance to make your decision). You could end up with less profit if
you get it wrong as the ability to "get back" the VAT on your
purchase of allowable goods, might be more than offset by the part of your
sales income which needs to be paid over to Customs and Excise.
VAT is a
tax collected and paid over to Customs and Excise by those who are VAT
registered. If you are registered for VAT, part of your invoiced sales is VAT
which you are collecting to pay, usually every quarter, to government. You may
deduct the VAT you pay on your purchases, of qualifying goods, from the amount
collected from your sales - the balance is then paid over.
Some type of businesses are not able to register for VAT, whether
or not they exceed to registration limit. Your accountant or Customs and Excise
can help you find out if you come into this category.
This could be an expensive exercise if you get it wrong so it could be
worth your while to seek professional advice