VAT or Value Added Tax is defined as the tax levied on a commodity’s price before the cost of production and taxes are rendered to consumers. The type of business determines the type of taxation. Any business that caters to the provision of goods and services in the UK is subject to tax. Value Added Tax is levy payable on all goods and services in the UK.

The concept of taxation can be intimidating for those just starting their own business. For better understanding and clarity, it is in your best interest to seek the advice of a professional consultant to know which plan suits your business.

When Your Business Needs to Register for VAT

If your VAT taxable supplies in the 30 days, when added up in the last 12 months exceed £85, 000 (which is currently the registration threshold) then you need to register for VAT.

You may not register your business if your expected taxable turnover doesn’t exceed the registration threshold (£85, 000).

Registering Your Business for VAT

For you to start a legitimate business in the UK, you need VAT registration. VAT registration can be categorized into two: compulsory and voluntary registration.

Compulsory Registration

A business in the UK is expected to register for VAT if it ranks over the VAT threshold, currently £85, 000. This is termed compulsory registration. In simple terms, your business must register for VAT if it exceeds the VAT threshold. However, you have a choice (voluntary registration) if it is below the VAT threshold.

Voluntary Registration

For voluntary registration, business owners choose to register their business regardless of whether VAT taxable supplies in the last 12 months exceeds £85, 000 or not. Many businesses opt for this option as it provides a lot of benefits. Choosing to register your business voluntarily will open streams of opportunities for your business. It will also increase your business reputation as you’ll have a much higher turnover than usual. For some business, however, voluntary registration may not be beneficial. Seeking the advice of a professional accountant will help you make a healthy decision.

VAT and taxation are broad and difficult for most people to understand. With regulations changing on a regular basis, it is virtually impossible for any business owner to successfully handle taxation. However, with the help of a third party service provider, effective VAT strategies can be employed to make the procedure faster. Hiring a professional accountant is a sure way of fulfilling VAT obligations and ensures that you are not violating any rule. These companies can help you process your company’s VAT UK registration hassle-free.

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