Frequently Asked Questions

VAT (or Value Added Tax) is added to the sale of goods and services, and imposed on the consumer. It is generally charged on most business transactions in the UK, but it can also affect items imported from other countries.

You will have to register your company for VAT with HMRC if its goods and services are VAT taxable – (a.k.a. ‘taxable supplies’) and its VAT taxable turnover exceeds the current VAT threshold of £85,000 in a 12-month period, or it is expected to exceed this amount in a 30 day period. You must also register if your company receives goods in the UK from the EU worth more than £85,000. Voluntary VAT registration is advisable if you expect your turnover to exceed the threshold amount in the current year, and it can also be beneficial for small businesses whose turnover is below the threshold.

Yes, you can opt for voluntary VAT registration if you expect your turnover to exceed the VAT threshold. By doing so, you could save a great deal of time that may otherwise be wasted on changing prices and accounting systems. You may also voluntary register for VAT even if your turnover is less than the threshold.

Voluntary VAT registration can provide a number of benefits to certain businesses – you could significantly improve your company’s cash flow by charging VAT on sales and reclaiming the VAT that you are charged by other businesses; a VAT registration number will be advantageous if you hope to do business with larger corporations because many of them will insist on a VAT number; and, additionally, it will give the impression that your company is larger than it actually is, which will be really appealing to other companies and organisations, and particularly intimidating to your competitors!

You must start charging VAT on anything you sell from the day you register for VAT with HMRC, not the day you receive your certificate. You should raise invoices for all sales made after VAT registration, and upon receipt of your certificate you can add your VAT number to the invoices, separate the sale and VAT amount and re-issue the updated invoices to your customers.

VAT registered companies will usually be required to submit quarterly VAT Returns showing the VAT charged on sales (output tax) and paid on purchases (input tax). If the output tax amount exceeds the input tax, a company must send the difference to HMRC with the VAT Return. Similarly, if the input tax is greater than the output tax, the difference can be claimed back from HMRC.