Beware the VAT Threshold
Newsletter issue - June 09.
Even if your business is not registered for VAT, you need to be aware of the point where your total sales require you to become VAT registered. This threshold is currently total sales of £68,000 for any 12 month period ending on or after 1 May 2009.
If your annual sales are near this limit you need to calculate your total turnover for the last 12 months, every month, adding the latest month and subtracting the earliest month each time, to check you haven't breached the threshold. Alternatively, if you believe your sales for the next 30 days will exceed £68,000 you must register for VAT immediately.
There are several advantages of keeping your sales below the VAT threshold:
- You don't have to register for VAT, but you can if you wish to.
- If you are not registered for VAT, your customers do not pay VAT on top of your basic prices. This makes your goods and services appear to be better value for money for non-business customers or other small non vat registered businesses.
- On your 2009/10 self-assessment tax return, which will be issued in April 2010, you will only have to complete three lines to report your business profits.
- You do not have to submit your VAT returns online.
Currently a small percentage of VAT-registered businesses submit their VAT returns online each quarter. But for periods starting after 31 March 2010 all VAT-registered businesses with a turnover of £100,000 or more will be compelled to submit their VAT returns online. Also any business that becomes VAT registered after 31 March 2010 will also have to submit all their VAT returns online, whatever its turnover.
If you become VAT registered before 1 April 2010 you will not be forced into online filing straight away, as you will be able to continue with paper VAT returns until your turnover exceeds £100,000, or the law is changed.
There are of course penalties for failing to register on time so please contact us if you need any help with the decision to register for VAT.
