VAT Registration
The registration threshold is £70,000 so you don't have to register until you are making that turnover. Being registered for VAT means that you must also charge VAT on all goods and services that you provide, and enables you to claim back VAT that you pay on your own purchases. If your customers are mostly VAT-registered it might be advisable for you to register for VAT voluntarily.
VAT can be described in three steps:
1. You buy supplies at a price that includes input tax.
2. You sell goods or services at a price that includes output tax.
3. You deduct the input tax from the output tax and pay the difference to Customs and
Excise or receive a refund if the input tax paid is more than the output tax received. For more information on VAT call 0845 010 9000 or visit www.hmce.gov.uk
At the end of each month or quarter (accounting period) businesses registered for VAT must complete a one-page VAT return for Customs and Excise. VAT returns and money owed must be sent to Customs and Excise within a month of the end of the VAT accounting period.
How to Register for VAT
Download and print form VAT 1 from the Customs and Excise website: www.hmce.gov.uk/business/vat/vatregist.htm
Word of Warning
Each year the government changes the VAT registration threshold; so make sure that you have access to up-to-date advice either through a governmental website or from your accountant.
