As the owner of a business, it is likely that you will pay VAT on many of the products or services that you buy for your business. Once your annual turnover reaches or exceeds £82,000 you must register for VAT. You can register for VAT voluntarily at any point up to the time when your turnover reaches this limit. Although being registered can bring with it multiple benefits, there are also many factors to take into consideration.
Value Added Tax is worked out on the point of sale of products or services that you buy and sell within your business. However, it is important to be aware that there are different rates for various products that you may purchase or sell. The standard rate, which applies to the majority of products or services, is 20%. If you are VAT registered you then add this 20% VAT onto the price of providing the product or service.
The majority of businesses will pay VAT on a quarterly basis to HMRC. Any VAT which is collected from your business must be accounted for separately from your revenue generated from normal sales. Any VAT that you collect is not yours it is being held for payment to HMRC when your VAT becomes due.
As VAT can be complicated to manage, many business owners request assistance from a VAT registration and administration accountant. There are many software systems to help you manage VAT but for business owners this can prove time consuming and complex. Accountants have the knowledge and expertise to advise you on the correct recording processes and how to manage your VAT effectively,
and your quarterly returns will be accurate and submitted on time. The Accountancy Network can help you find a good accountant who has specialist knowledge in VAT registration.