Andrew Needham looks at when a new business should register for VAT, and why.
Businesses have to register for VAT when their taxable turnover exceeds the VAT registration threshold (currently £90,000 per annum). The turnover is measured over a ‘rolling’ twelve-month period, not the calendar year, or the annual accounts year. Where a business has not been trading for twelve months, it will be all of its taxable turnover to date.
When measuring taxable turnover to decide if it needs to register for VAT, it should include all sales that would be subject to VAT at the standard, lower or zero rate. The business should exclude exempt supplies, sales that are outside the scope of UK VAT, one-off sales of capital assets, and non-business supplies.
Once a business is liable to register for VAT, it must inform HMRC within 30 days of the end of the
