A Quick Guide to VAT Registration
If there's any season business owners, employees, or even self-employed individuals dread, they'll all probably respond in unison and say tax season. There's no doubt people get frustrated during this time of the year with the plethora of things to consider and confusing amounts to pay, so it’s not an understatement to say that taxes can be pretty complex for the average person.
That’s why it's always a good idea to stay informed and understand the different terms and processes, so you're not lost in the chaos. Of course, a great way to swim through your tax responsibilities is by working with credible accountants so they can share essential knowledge and tips, as well as get you through the dreaded tax season.
With that being said, in this article, we'll put a spotlight on VAT—what it is, how to register, and more. Let's take a look!
What is VAT?
Value Added Tax or VAT is an end consumer tax often assessed incrementally. This type of tax is charged on a product or service price at every stage—from production, distribution, sale, and end customer. In short, it's the additional charge on goods and services from a business that is given to the end customer.
For businesses, they can be charged VAT across various "taxable supplies", including business sales, loaning or hiring goods/services to someone, commissioning, selling business assets, items sold to employees, business goods for personal use, part-exchange, bartering, and gifts.
If your business is registered for VAT, you need to account for your AT across all your goods and services. At the end, you can also claim VAT on other business-related goods and services you've paid for.
When Do I Register for VAT, and How Do I Do It?
A UK-based business must register for VAT via the HMRC if or when their annual taxable turnover in the last year or next 30 days is greater than the VAT threshold. Usually, the threshold amount is reviewed and updated in budget statements and currently stands at £85,000.
If you're ready to register for VAT, you can register your business via gov.uk VAT registration pages—both for those who are paying VAT voluntarily.
After you've registered for your VAT number, you'll get a VAT account that allows you to submit your VAT returns to HM Revenue and Customs. Ideally, working with an accountant can help you out with the complexities, as well as guide you through computation and submission of returns, revenues, and other payments.
How Does VAT Work?
Now that you have your VAT number, it's imperative to include this in all the sales invoices that you've issued. However, you don't have to worry about reissuing or changing your invoices before this, but you need to take note of your VAT registration date to ensure your VAT account stays effective.
The Bottom Line: Hire an Accountant to Help You with Your VAT Payments
There's no denying that VAT can seem pretty intimidating at first, but if you follow the guide and process, you're sure to breeze through tax season with ease. While you can DIY your tax season, it's always a good idea to have professionals work with you to ensure that you're taking the right steps for your VAT payments.
To that end, it's worth working with experienced accountants to help you manage your tax responsibilities.
How Can We Help You?
Are you looking for accountants in Hillingdon? If so, you've come to the right place because 1 to 1 Accountants is here to help.
We understand that business finances can be complicated, but with our team of financial experts, we'll help you swim through all your financial responsibilities. Whether you're a small business or freelancer, we're here to help. Reach out to us today!
