When to register for VAT
If or when you register for VAT, you need to charge VAT on any goods and services you provide that are subject to VAT and will also allow you to reclaim some or all of the VAT you suffer on your purchases.
All businesses must register for VAT if their UK turnover of taxable goods and services exceeds the VAT threshold in the previous 12 months (currently £79,000) or expect to exceed the VAT threshold in the following 30 days alone. If you register, you can deregister later if you can show HMRC that your taxable turnover will fall below the deregistration threshold (currently £77,000).
However, even if the turnover is below the VAT threshold, there can be advantages to voluntary VAT registration especially if you are providing services to other VAT registered businesses or if you sell zero-rated goods, as it enables the business to claim back the VAT paid on it’s purchases and expenses.
Whether you register online or by post it can take HMRC several weeks to process VAT registrations and issue a VAT registration number. During this period you must account for VAT from the date when VAT registration was required which means you will need to keep proper VAT records and account for and pay VAT online. Certain rules apply to how invoices are raised and you should seek advice.
Once registered the business may be able to reclaim VAT spent on equipment bought in the previous four years and services up to six months ago. You must have proper VAT records but would suggest you take advice if you think you wish to take advantage of this.