The VAT registration threshold is currently an annualised turnover of £85,000.
When your income (turnover) goes over this, or you expect it to in the next 30 days, you must register for VAT or you will be liable to penalties and back-dated VAT.
Your income is assessed on a 12 month rolling basis - so every month you should assess the income from the last 12 months.
When your income (turnover) goes over this, or you expect it to in the next 30 days, you must register for VAT or you will be liable to penalties and back-dated VAT.
Your income is assessed on a 12 month rolling basis - so every month you should assess the income from the last 12 months.
There could be advantages to registering earlier, including:
- if you make a lot of purchases, you may be able to reclaim the value of VAT on these items (not all costs contain VAT though)
- it can add a more professional touch in the eyes of certain customers
However if your customers are not VAT registered themselves, your business being VAT registered can cause you commercial pricing issues as you will effectively be more expensive to that customer than your competitor who operates below the VAT threshold. This is particularly an issue where your customers are largely consumers rather than businesses.
Each quarter, all businesses that are VAT registered must account for all the VAT they have charged to others, or paid out to suppliers and since 1 April 2012, all businesses are now required to submit their VAT returns online.
More info from HMRC here:
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