It is possible to ask HMRC for a change in the periods and the most common reason is to align with UK company year-end or your accounts reference date.
When must I register for VAT?
The UK threshold is set at £85,000. However, it is based on a 12-month rolling period so not just for the fiscal year 6th April to 5th April (the UK tax year). If it is likely that your sales of goods/services that would be applicable to UK VAT exceed £85,000 in a 12-month period looking back and forward, then you must register for UK VAT. This threshold has remained unchanged since 1 April 2017.
A business can register voluntarily for VAT which may give rise to a cash flow benefit, as well as giving perceived comfort to your customers. From a marketing perspective, by not being vat registered it may give the impression to prospective clients that you are a small business, and this may put them off from using your services as they may feel that you are too small and not able to fulfil their order due to lack of resources.
Of course, there are disadvantages of being vat registered in that you have to prepare vat returns on a quarterly basis or employ a bookkeeper or accountant to do it for you. This adds to the cost of doing business. Being UK VAT registered may make you more expensive to your non-vat registered customers and not as competitive. That said, unless you are a business to consumer operation, it would generally be expected your customer would be VAT registered. Of course, if you are over the threshold, you have to legally register.
Remember that your VAT taxable turnover includes only the goods and services you sell that you have to charge VAT on, even those that are zero-rated. It doesn’t include sales that are exempt or outside the scope of VAT.
What about pre-registration costs?
This is interesting. You can claim back VAT on any items of equipment or stock that was purchased for the business up to four years prior to the registration, provided that the items are still in existence and part of the balance sheet. For services, you can go back 6 months.
How do I report?
Most business report online either by their Government Gateway login, or through their accountant’s agent login. Payment needs to be made at the same time that the return is submitted. If a repayment is due, filing online and ahead of the deadline means the refund should arrive reasonably quickly either by cheque or bank transfer, depending on which option you have.
How can we help?
The first step is to establish if you need to be VAT registered and if it’s agreed you do, we can work with you to complete the VAT registration form. Depending on who is registering for VAT: a UK Ltd company, or an overseas company – the data gathering process will vary slightly.
Once the registration has come through, we can help set up processes to collect details relevant for the VAT return in your accounting procedures.
We can also set you up on line in order to do online reporting of your VAT return which gives you a bit more control over the reporting and payments going out, and also make sure the direct debit is set up on the system to allow HMRC to take the required payment. Money needs to be in the nominated bank for this to happen in order to stop rejections from the bank.
We usually act as VAT agent for our clients. If that is the case, we will get you to approve & and confirm the draft VAT return, file it online and let you know how much you need to pay – although you will know that from the draft.