How To Register For Vat

VAT Registration

VAT is a complex tax that is administered entirely past the taxpayer, the business. HMRC expect the business to know how to manage the taxation and to operate reliefs, simplifications and use all the circuitous VAT rules to comply.

Failure to practise and then volition effect in interest charges and penalties. Over the side by side few months some basic guidance on how to manage VAT will be provided, but this will be general guidance and it is the businesses' responsibility to ensure that information technology applies to their particular situation. This month VAT registration will be examined.

Registration threshold

A business concern must register for VAT when their turnover exceeds the VAT registration threshold in the by 12 months, or you know you are going to exceed the threshold. This is currently £85,000. You must register for VAT if your taxable turnover exceeds the threshold in the last 12 months, or if y'all expect yous volition exceed the threshold in the side by side 30 days.

Points to bear in listen are as follows.

Just taxable turnover is included, that is sales that are zilch-rated, bailiwick to VAT at the lower rate or subject field to VAT at the standard rate, simply does not include exempt sales.
The 12-calendar month period must be examined at the end of each month, non at the end of the financial year. If the business is nearing the threshold, you lot must monitor taxable supplies each month.
The value to be included in the registration threshold calculation includes:
- goods hired or loaned to customers
- business organisation goods used for personal purposes
- goods bartered or role exchanged
- services received from businesses outside the UK (items subject field to the "reverse accuse")
- building work over £100,000 if the business organization did it for itself.

Exempt sales

It can be difficult to determine what sales are exempt from VAT. This is a complex surface area and professional person advice must exist sought if it is thought that exempt sales are fabricated. Understanding exempt sales is important as you practice not charge VAT on exempt sales, they practice non count towards the registration threshold and no VAT on expenditure that relates to the exempt auction tin be reclaimed. Examples of sales that tin can be exempt include:

some property transactions (but not garage lets, parking fees, holiday or hotel accommodation or new sales of residential belongings)
insurance
betting and gaming
credit transactions
some teaching supplies
some membership subscriptions
some health services
undertaker services.

VAT registration date

The date of VAT registration when the threshold was exceeded in the past 12 months is at the end of the month the turnover threshold was exceeded. The business concern has 30 days after the end of the month where the turnover has been exceeded to notify the demand to register and the date of registration volition be the offset of the side by side month.

Example: JD Fabrics sells £twenty,000 of appurtenances (all standard rated goods) each month and the business commenced on 1 Jan. Cumulative sales are:

January – £20,000
February – £twoscore,000
March – £60,000
April – £80,000
May – £100,000

By the end of May, the threshold has been exceeded. HMRC needs to be notified of this by thirty June and the constructive date of registration volition exist i July. From one July, VAT needs to exist charged on all sales made, other than zero-rated sales and exempt sales. VAT incurred on expenses and goods purchased for resale can also be reclaimed.

Should you realise that the threshold will be exceeded in the adjacent xxx days, you are required to register immediately. If, for example, you realise on 15 January you will exceed the threshold in the next 30 days, you must notify HMRC within 30 days, and you will be registered with effect from 15 January. VAT must exist charged on all sales from 15 January. Equally you do non have a VAT registration number yet and are not yet actually registered yous cannot issue a VAT invoice nor show VAT on an invoice. You tin, nevertheless, charge an amount that includes the VAT that volition be charged and issue a VAT invoice when the VAT number is issued to you to enable the customer to reclaim the VAT charged. For instance, if the auction is £100 yous will demand to charge £120 including VAT. When the VAT number is issued yous volition result a VAT invoice showing VAT of £20. Alternatively, y'all may initially issue an invoice for but £100 and later upshot a VAT invoice for the actress £20 VAT.

Voluntary registration

A business tin register for VAT even when its turnover is less than £85,000. This is advantageous where the business's customers are likewise in concern and can reclaim the VAT they are charged. Voluntary registration will allow the concern to repossess VAT on expenses and appurtenances bought for resale. Although information technology has to charge VAT on its sales, its customers can reclaim the VAT charged. It is disadvantageous to voluntary register where the customers cannot reclaim VAT, usually where the customers are members of the public. This is considering they cannot reclaim the VAT charged and the VAT is an extra cost increasing the auction price of appurtenances sold or services supplied.

When exercise yous not take to register?

Registration is compulsory if you exceed the threshold. There are, withal, two exceptions. The kickoff is where you brand mainly aught-rated sales. It is necessary to contact HMRC and employ the online registration procedure (or write to the registration service in Wolverhampton) to give the details of the supplies that the business makes. If HMRC does not agree that the majority of supplies made are zero-rated, you will be registered for VAT under the normal rules.

A 2d exception to VAT registration is where yous believe the threshold is only going to be exceeded temporarily (for example you have an unusual one-off large auction). Information technology is necessary to write to HMRC explaining that the threshold has been exceeded but you expect that time to come sales will non exceed the deregistration threshold in the next 12 months. The deregistration threshold is £2000 beneath the registration threshold and is currently £83,000.

Whilst this enables the price charged to the customer to be lower (equally no VAT is charged on reduced charge per unit or zero-rated sales), this is just advantageous where customers cannot reclaim VAT, as VAT on expenses cannot be reclaimed.

Claiming input tax

Input taxation is the VAT incurred past the business on goods bought for resale or business organization expenses. This VAT tin can be reclaimed on the business's VAT returns. The business can also reclaim VAT on a number of expenses incurred prior to registration. This includes any goods acquired in the previous four years if the business still has the goods (or where they have been used to make other goods that the business yet has) or on services received in the previous six months. To repossess the VAT incurred, information technology is necessary to accept purchase VAT invoices that support the claim for input taxation. In addition, the appurtenances or services that were acquired before registration need to be included in a listing giving a description of the items, the purchase date and a description of how they were used in the business organisation.

Group registration

Where the business consists of more than one body corporate (that is companies or limited liability partnerships) they tin can annals as a single VAT registration. This means that only one VAT return is submitted for all the group members and VAT is only charged on sales to non-group entities. VAT is not charged on sales within the VAT group. Should it be considered that a grouping would be advantageous further advice should be sought to ensure all the advantages and disadvantages are understood.

Transfers of Going Concerns

Where an existing and ongoing business is acquired, the acquisition will be treated as a transfer of a going concern. No VAT will be charged on the transfer of the business concern, but the person acquiring the business will need to register for VAT immediately. Where a business is not transferred but a collection of assets is acquired, VAT will be charged on the auction of the assets. The acquiring business will probably desire to annals for VAT to reclaim this VAT charged.

When there has been a transfer of a going business, it is possible to transfer the existing VAT number. This seems helpful as it provides continuity but information technology is frequently not advisable as any VAT liabilities will too exist transferred. It is unremarkably recommended non to transfer the VAT registration number to ensure that the old business'southward VAT liabilities are not transferred to the acquiring business organization.