Our professional VAT return accountants in Peterborough work with a lot of clients on their VAT returns throughout the year. However we understand that for a small business, the world of VAT returns can be a confusing world. This is why we have put together a beginners VAT guide for small businesses. This is a really easy guide that gives you the fact about VAT that you need to know.
What is VAT?
We couldn’t complete a beginners VAT guide for small businesses without talking about what VAT is. VAT is Value Added Tax. It is a tax on consumer expenditure and is collected on the sale of goods or services. VAT has been around since 1973 when the UKL joined the EEC. Previously VAT was known as Sales Tax.
What is VAT Charged On?
VAT is often charged on things like the sales of your goods and / or services. It can also be charged on exchanges, for example things like a new car in exchange for an old car. When you are selling your business assets, you can be charged VAT on this too.
Business goods that are used for personal reasons may also have VAT charged on them. You will also be charged VAT on commission as well as items sold to staff, such as uniform or meals. If you hire or lease your goods, VAT will be charged on this too.
When Do I Have To Register For VAT?
If your business has a VAT taxable turnover of £85,000 or more in the last 12 months then you must register for VAT. However, if it is expected that your VAT taxable turnover will be more than £85,000 in the next 30 days period, this is another time that you must register for VAT.
When it comes to the end of a calendar month and you find that the value of your taxable sales exceeds £85,000 over the last 12 months you need to register for VAT. We would recommend that you contact a professional VAT returns accountant who will notify HMRC on your behalf. You will then be VAT registered from the first day of the next month.
Good to Know
If you have just become a VAT registered business but are holding any assets that have been purchased previously you should be able to reclaim VAT back on registration. These assets could be things like furniture, machinery, technology or equipment for example.
However, the most important thing to gain from reading this beginners VAT guide for small businesses is that if you’re in doubt, check! If you’re not sure about anything on your VAT returns then call your specialist VAT returns accountant and ask.