VAT Advice

This is often the forgotten tax for small businesses! The threshold for VAT registration is £90,000 (24/25) of taxable supplies over a rolling twelve month period. Many businesses may start off not being VAT registered, however it is very important to keep monthly records of turnover to ensure you know when you breach the threshold.

Breaching the threshold will require you to register for VAT and become Making Tax Digital compliant (MTDfV). A blog post can be found here.  Your business will normally complete quarterly VAT Returns, although there are other options.


When to Register for VAT?

It is important to consider various matters when deciding to register for VAT, as sometimes you want to register before breaching the threshold.

For example, if your customers are all or mostly VAT registered, you may be better off becoming VAT registered. This allows you to recover the VAT you suffer on purchases and also not becoming more expensive to your customers, as they would be able to claim the input VAT on your invoices to them. Another reason could be because you are a repayment trader; the most common examples being farmers or those making out of scope sales, which would be taxable if made in the UK.

Delaying registration to when it is compulsory can have its benefits for your profitability.  However you will want to consider your pre-registration expenses and ability to reclaim the VAT on these.

We can offer you tax advice about VAT registration and returns.

What VAT scheme?

After VAT registration, there are various schemes available with guidance found here, some of which are specifically industry related. These include the Invoice Basis, Cash Accounting (giving a cash flow advantage), Annual VAT Accounting, Flat Rate Scheme, Retail Scheme, Agricultural Flat Rate Scheme and Second-Hand Goods Scheme.

A little known quirk is the possibility to claim VAT on rental property costs if you are a sole trader already registered for VAT, through the partial exemption rules. You can do this as you as a person are VAT registered rather than your trade. It is something to keep in mind.

The records you must keep can be found here.


What are the UK VAT rates?

VAT is a turnover based tax rather than a profit-based tax, therefore any error in adopting the right strategy can be extremely expensive. The Rawlinson Pryde & Partners team can provide detailed advice on all areas of VAT registration, planning and calculations, as well as dealing with the ongoing compliance.

VAT is also a surprisingly complex tax with various rates:

  • Standard rate – 20%
  • Reduced rate – 5%
  • Zero rate – 0%
  • Exempt
  • Outside the scope

There are many other things to consider such as partial exemption, or the Capital Goods Scheme.

We can offer you VAT advice about any issues identified during the course of preparing your accounts, however, we will also provide a specific VAT health check to make sure that the business is complying with the VAT regulations that apply to it.

We are happy to assist you in completing your VAT Returns or to complete your VAT Returns for you, whether at your premises, or at our offices in Bedford.

Making Tax Digital for VAT

It is now compulsory for all VAT registered businesses with a taxable turnover in excess of the VAT registration threshold to comply with Making Tax Digital.

Essentially this means your business is required to keep its bookkeeping records on a computer software program.  There are many options and links and information can be found on our bookkeeping page.


How to check a business is VAT Registered

For those businesses wanting to check the VAT status of a UK or EU business here are two helpful websites that can assist you:

If you require some VAT tax advice, please contact us by calling us on 01234 300500, emailing us at [email protected] or directly to one of our team and we would be delighted to assist you.

Client Testimonial

Having been with Rawlinson Pryde & Partners since I started my business 18 months ago.  They have provided excellent professional advice and support services throughout this period and recently managed an HMRC enquiry for my company through the business insurance scheme, which resulted in a successful conclusion to the investigation despite some unforeseen complications.  Matthew and his team provided excellent guidance and support throughout this stressful period. More than happy to recommend their services. – 4 Ever TT Ltd.