24 Aug VAT registration and why you should consider it
VAT registration becomes a legal requirement if your business is turning over in excess of £85,000. VAT registration can be done, relatively easily, online through the HRMC website.
Though VAT registration is often the cause of headaches and confusion, the reality of the matter is that it doesn’t need to be. There is an enormous amount of help and advice available to help you navigate VAT registration safely.
But what exactly is VAT?
At its core level, VAT (Value Added Tax) is a consumption tax. It’s a tax that’s paid on all goods and services within the European Union, no matter how they are provided, though certain financial services and property transactions, among others, are VAT exempt. The rate of VAT has been 20% in the UK since January 2011.
VAT registration becomes legally mandatory at the point of your business reaching an annual turnover of £85,000. However, it may be of use to you to consider voluntarily registering for VAT status beforehand to make sure that you don’t become liable for back-payments, taking into account delays in processing your application.
How VAT registration benefits you
VAT registration is a legal necessity at a certain point, so whether you like it or not you have to comply with the regulations. But that doesn’t mean there aren’t advantages of being VAT registered to make the process worthwhile for you.
For instance, many businesses of all sizes, including SMEs and large corporations, will only deal with other businesses who are VAT registered. This means that being VAT registered will open you up to a wide pool of potential clients.
There is also an air of legitimacy to being VAT registered, and it may give customers the appearance that you’re a larger operation than you actually are. This is another benefit of considering the VAT registration process before you’re legally required to do so.
VAT registration will also allow you to claim back-tax paid when buying goods that can be thought of as a business expense such as computer equipment, office supplies, and even in certain circumstances your travel expenses.
To find out more about registering for VAT, speak to us at SQK Accountancy today.