Written by Director Huw Moseley:
I’ve just been with a new client who has experienced high sales in the last 12 months and now needs to register for VAT with HM Revenue and Customs (HMRC). His profit margins are tight, so he was surprised to hear that registration was necessary – but this is the case because the threshold is linked to your “taxable supplies” (sales/turnover) rather than profit…
As these rules apply to all commercial businesses – it’s worth checking whether you meet the criteria for registration:
Since April 2017, the threshold is set at £85,000 (this figure is likely to increase in April 2018) which is calculated on a rolling basis. Therefore, it’s vitally important that you’re routinely monitoring your taxable turnover for the 12 month period – not just in the current financial/calendar year.
For the avoidance of any doubt: if at the end of any given month your turnover for the last 12 months exceeds £85,000, it’s time to get registered for VAT.
There are many more things to be aware of in relation to VAT but this is a useful starting point. If you have any questions about how to register, or need any assistance dealing with HMRC and simplifying VAT – give us a call and we’ll be happy to help.