A good start for VAT

When you are starting or growing a business, getting your VAT registration right is very important. You don’t usually have to register until you have made sales of £77,000. If you register before you have to, you have to account for VAT on sales that could have been VAT-free. If you register later than the law requires, you can suffer a penalty.

Unregistered traders are supposed to check that £77,000 limit at the end of every month, and have to act within 30 days if they go over. If you only think about your accounts once a year for income tax purposes, at least be aware of the level of sales – and if you are suddenly very busy, don’t let it distract you from the possibility that you might need to tell the VATman.

You might want to register before you are required to so that you can claim back VAT on start-up expenses. You can lose out if you incur VAT too long before the date you put on your VAT 1 registration application, because there are time limits on what you can claim back. You also can’t change the date once you’ve submitted the application – so it’s very important to plan ahead and decide when you might want to, and when you might have to, register for VAT.

Posted in News.