It always amazes me that there are people out there who still believe registering for Vat is a choice and not a legal requirement!
To begin with let’s remember that the Vat threshold in the UK for turnover is £85,000 per annum. Meaning if your annual turnover will be 85K and above you will have to register for Vat.
When is the best time to become VAT registered?
Would you just wait until the 12 months are up and go “darn, my turnover has exceeded the threshold lets register”?
I would advise a better solution:
Look at your turnover for this month and if it is £7,083 or over and you believe that the next 11 months this level of turnover will be achieved then it is time to register for VAT. This would enable you to charge your clients the vat almost immediately and be able to budget accordingly for a quarterly or annual payment.
Quite often now new companies are registering for Vat form the date of incorporation, even if not sure of reaching the turnover threshold.
Why is being VAT registered beneficial to my company?
This can be beneficial in many ways. Some key points to consider about VAT registration are:
- There is no adding on 20% to your prices after a time of not being registered. Not all your clients may be vat registered and that would mean a 20% price rise for them.
- There is still the perception that a Vat registered business is more professional and stable than one that isn’t VAT registered.
- When turnover may be low to begin with or there has been some major purchases to start up that are vatable a reclaim, basically a refund of vat may be claimable.
- This is the one I like, as well is that it could be used as a forecast or target to achieve the threshold turnover.
Takes away the hassle months down the line when you are a bit more established and getting busier. It is always good to get things in place from the inception.
Which VAT scheme is applicable to me?
There are various Vat schemes to consider when registering, such as:
- Cash Accounting Scheme
- Annual Accounting Scheme
- Flat Rate Accounting Scheme
- Vat Margin Scheme
I would strongly advise to speak to an accountant or bookkeeper before registering under any or other of the available vat schemes. They will be able to offer the advice as to which scheme best fits your business.
In summary if you have just started or starting up a new company I would consider if becoming registered for vat would be beneficial for your company and failing that
keep an eye on the red flag monthly turnover which will be your indicator.
Where can I get help on becoming VAT registered?
If you would like to discuss or require any advice around VAT then you are in the best place on our website www.tandem-solutions.co.uk. You can quickly and easily book a book a discovery call by clicking on the big button at the top of the website.