Most common questions and answers on VAT registration. Your business may be required to register for VAT if it meets certain criteria. It can also be beneficial for some businesses to register for VAT even if they are not required to. Kate Fisher of CJ Fisher & Co explains the circumstances under which your business should be VAT registered
When do I need to register for VAT?
A business must register to pay VAT when the value of its VAT taxable turnover (total value of sales that aren't exempt from VAT) in the previous 12 months or less exceeds the registration threshold of £90,000 per annum from 1 April 2024 (£85,000 between 1 April 2017 and 31 March 2024). You must also register if at any time you expect the value of your VAT taxable turnover in the next 30 days alone to exceed the registration threshold.
Would it be beneficial to register for VAT if my turnover is below the threshold?
Yes, if you make all or the overwhelming majority of your sales to VAT-registered businesses, because you will be able to reclaim VAT on any business expenses you incur. 'Voluntary registration' is the term given to becoming VAT registered even though your turnover is below the registration threshold.
What does the VAT registration process involve?
You will need to complete a VAT application form, which is available from HM Revenue & Customs (HMRC). This should be completed online, unless you meet one of the very limited exemptions. There is no charge for completing the form. Once registered, you will then have to complete quarterly VAT returns online - regardless of how you originally registered and pay your VAT bill.
Currently, my turnover is too low, but if it looks like I'll exceed the threshold next year...
As I've said, it can be beneficial if you make all or most of your sales to VAT-registered businesses, because you can reclaim VAT on any business expenses you incur.
If I've only just gone over the threshold, but I won't exceed it next year, can I argue my case with HMRC?
If you can provide evidence and explain why the value of your VATable turnover will not go over the de-registration threshold of £88,000 from 1 April 2024 (previously £83,000) in the next 12 months, you may not have to register. However, you still have to inform HMRC National Registration Service that you have reached the limit.
Can I reclaim VAT on business purchases before I registered?
Subject to certain conditions, you can reclaim any VAT you incurred before you registered. This would include VAT on goods you bought for your business within the past three years and which you have not yet sold; and VAT on any services you received not more than six months before your date of registration.
I'm thinking of splitting my business up so that I don't exceed the VAT threshold...
You cannot do this. HMRC will not allow you to artificially separate your business to avoid registering for VAT.
If some of my sales are made overseas, must I register for VAT in the UK?
All sales are included to calculate whether you have reached the registration threshold, whether these are made in the UK or not.
Written with expert input from Kate Fisher of CJ Fisher & Co.