February 4th, 2016
Do I need to be VAT registered?
I get asked this question daily, so here’s a quick guide to your responsibilities with respect to VAT and the registration threshold:
1.You must register for VAT when your VAT taxable turnover breaches the £82,000 threshold.
2.You must check your turnover for the previous 12-month period every month to ensure that you haven’t breached the VAT registration threshold.
3.You must include the following in your review:
- goods you hired or loaned to customers
- business goods used for personal reasons
- goods you bartered, part-exchanged or gave as gifts
- services you received from businesses in other countries that you had to ‘reverse charge’ (both LinkedIn and Google Adwords apply the reverse charge rules so look out for this)
- building work over £100,000 your business did for itself
4.Include any zero-rated items – only exclude VAT-exempt sales, and goods or services you supply outside of the UK.
5.Remember that any services you supply to customers overseas and not charged VAT are not ‘zero-rated’. The place of supply is deemed to be where that customer is located, meaning that they are outside the scope of UK VAT altogether and consequently, you are not required to include those sales in your VAT registration threshold calculations and they are not turnover for the purposes of any flat-rate scheme calculation.
6. If you’re over the threshold you must register for VAT by the end of the month following the month that you breached the threshold.
7. You must also register for VAT if you know that you will breach the threshold in any 30 day period.
8. If you temporarily breach the threshold then you can apply to HMRC for a registration ‘exception’. You need to write to HMRC with evidence to show why your turnover won’t go over the VAT deregistration limit of £80,000 in the next 12 months.
If you have any concerns or worries about the VAT registration threshold then please do get in touch and we can guide you through.
