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Understanding When and How to Register for VAT

Understanding VAT Thresholds: When and How to Register

If you’re running a business in the UK, Value Added Tax (VAT) is something you need to keep on your radar. It’s a tax charged on most goods and services, and knowing when you need to register for VAT is crucial to staying compliant with HMRC.

In this guide, we’ll cover the basics of VAT thresholds and an understanding on when and how to register for VAT.

What Is the VAT Threshold?

The VAT threshold is the point at which your business must register for VAT. Currently, HM Revenue & Customs have set the threshold to £90,000 in taxable turnover over any rolling 12-month period. 

Key points to note:

  • The threshold is based on turnover, not profit, so even if you’re not making much profit, you may still need to register.
  • The 12-month period isn’t fixed to your financial year; it can be any continuous 12-month window.
  • If your turnover is nearing the threshold, it’s essential to keep a close eye on your figures to avoid missing deadlines.
  • The threshold may also include ‘Zero Rated’ supplies.
  • You can voluntarily register for VAT even if your turnover is below the threshold.
  • If your taxable turnover falls below £88k, you can ask HMRC to cancel your VAT registration.

How to Register for VAT

  1. Apply Online Through HMRC: You’ll need your business details, turnover figures, and information about the goods or services you supply.
  2. Get Your VAT Number: Once registered, HMRC will issue you a VAT number, which you must include on all invoices.
  3. Start Charging VAT: You’ll need to add VAT to your sales at the appropriate rate (standard, reduced, or zero-rated).
  4. Software: You’ll need to set up on a software so that you are compliant with HMRC’s Making Tax Digital (MTD) regime

What else do you need to know?

Once you’re VAT-registered, you’ll need to:

  • Submit VAT returns to HMRC, usually quarterly, via a MTD compliant software.
  • Pay VAT owed or reclaim VAT on business expenses, depending on your situation.
  • Keep detailed records of your sales and purchases for at least six years.

Under the standard regime, you would account for the VAT based on the invoice dates of your sales and purchase invoices however there are various schemes available to use within the VAT regime to simplify your compliance, including:

Recently we met with two HM Revenue & Customs officers who advised that HMRC are now working with large corporations, such as food delivery giants Uber Eats, Deliveroo and Just Eat , online platforms like OnlyFans, Ebay, Vinted and card merchants as part of their disclosure programme to help them identify anyone who should be registering for VAT.

Failure to notify HMRC will likely end up in a penalty, a VAT bill to catch up on and a headache in sorting all your records out.

How Can Brisan Help?

At Brisan, we have the expertise to support you end to end with VAT accounting and provide the following services:

  • Initial VAT Registration
  • Set up of your Making Tax Digital software and training
  • Answering your VAT questions
  • Preparing your VAT returns
  • Deregistering your business for VAT
  • Supporting with VAT enquiries

Need VAT advice? Contact us today or book an initial consultation to get started