What You Need to Know about VAT Registration Date
The government requires all businesses with a turnover over a specific level (£85,00 right now) to charge Value Added Tax to customers, collect the tax, and pay full to the HMRC. According to the law, your business should be VAT-registered for you to be able to charge and collect that tax. It's also vital that you register by the correct date.
You may also voluntarily register your business for VAT if you will benefit from it. This post shares how you can identify the correct VAT registration date:
When Is Registration Required?
HMRC has set requirements for VAT registration:
- Your business' total turnover that is subject to VAT for the last year is beyond the current VAT threshold of £85,000
- You predict that your turnover for a year will go past £85,000 in the next month
- You have taken over another business, and your combined turnover is at least £85,000 in the last year or the next 30 days
- You have taken over a VAT-registered business
- Your business is based offshore, and you supply goods or provide services to the UK, or you're planning to supply them in the next 30 days
You must note that your turnover includes both goods and services. Also, not all turnover is subject to VAT, and some of that turnover could be exempt.
Calculating VAT-Rated Turnover
When your turnover goes over the threshold, VAT will apply to all the goods you sell and the services you offer, except those that are VAT-exempted. If you have no idea which goods or services are exempted, the government publishes a list of those, so make sure you check that to be certain.
In general, though, turnover includes:
- Business goods that you use for personal reasons
- Goods that customers hire or take on oan
- VAT-rated goods and services
- Zero-rated goods and services
If the goods or services you offer are exempt from VAT, you won't have to register.
If you go over the threshold in the last year, you must register within 30 days of the end of the month when you have gone over the threshold. The registration date would be the first day of the second month after you've exceeded the threshold.
For example, if you exceed your threshold on May 4, 2023, you must register before the end of June 2023, and the effective registration date is July 1, 2023. If you expect to go over the threshold in the next 30 days, you must register by the end of that period. But the effective registration date is the date you determined you will exceed the threshold and not the date your turnover will go over the limit. So, if you exceed the threshold at the end of November 2023, you need to register by November 30, 2023, but your effective registration date is November 1, 2023.
Late Registration or Registration Delays
Even if you apply for registration at the right time, your application may still take some time to be processed, and you might not be able to get your VAT number for a few weeks after the actual effective registration date.
Your VAT registration certificate can be expected to arrive within 30 working days, though it has taken longer in some cases.
That said, you must still charge, collect, and pay VAT starting from the effective date, so expect to have some backdates for some of your early VAT invoices. Similar conditions may also apply if it's a late registration, but there may also be a penalty to deal with.
It is essential to determine the exact registration date, as it serves as the starting point for calculating the VAT liability. The date of registration is also important for the purpose of filing returns and determining the tax period for which the business is liable to pay VAT. Thus, businesses should ensure that they register for VAT on time and obtain the relevant documents to prove their date of registration.
We hope this guide from our trusted accountants can help you understand more about VAT registration dates. Should you need help, it's best to consult with trusted accountants near you.
1 to 1 Accountants offers the services of reliable accountants in the UK. Get in touch with us to know how we can help you!