Tax Tips - Value Added Tax

These tips are guidance only and do not constitute specific advice. Detailed professional advice should be taken before action or refraining from action.

Compulsory VAT registration is necessary when your annual business turnover exceeds the registration threshold at the end of any month (Limit £73,000 from 1st April 2011). Penalties of up to 100% of the tax due may be charged for failure to register. Business turnover should therefore be monitored carefully.

Voluntary registration may be beneficial where your customers/suppliers are mainly taxable persons, but not where they are the general public. If no taxable supplies have yet been made, early registration will ensure input VAT suffered can be recovered.

A flat rate scheme can be applied for. It is aimed at simplifying record keeping and accounting requirements. There can be considerable savings by opting for this scheme it is available for businesses with an annual turnover below £150,000.

It is worth considering the pros and cons of the scheme.