For many business owners, contractors and locum practitioners, understand, and recording VAT is one of the most complex and worrying part of running your own business. NextGen Accounting are here to help simplify the process, and can assist with all areas of VAT from helping with VAT registrations to making sure that you are neither over nor underpaying your value added tax.
In UK, there is currently a VAT registration threshold, so if your business’ annual turnover exceeds this amount, you must register for VAT – failing to do so within 30 days may result in a fine. Be aware that the thresholds are constantly changing, so it’s important that you check for the financial year you are in. VAT is calculated on a rolling 12 month basis, and not on turnover for a calendar year.
In addition to businesses that earn above the threshold who must register – you can choose to do so voluntarily. NextGen Accounting are on hand to help you to register for VAT, help ensure that you are on the correct VAT scheme and can provide assistance with your VAT returns too.
If your business income is over the current threshold, you must register for VAT.
Even if you do no reach the threshold – there are some benefits to being VAT registered which include:
•   Being able to reclaim any VAT which you are charged when you pay for goods or services.
•   The VAT you pay, known as ‘input tax’, could end up being more than the VAT you collect from your customers, the ‘output tax’. If your input tax is more than the output tax, you can collect the difference back from HMRC, saving you some money.
•   By registering for VAT you are safe in the knowledge that if you reach the threshold, you are already registered and will not face any compliance issues.
•   Being registered for VAT gives you some ‘kudos’. By not being VAT registered, clients and businesses that you deal with will be aware that you do not earn over the threshold.
Conversely, there may be many reasons that, if you do not earn over the threshold you may not wish to register for VAT including:
•   Additional paperwork – VAT returns add to your potential workload.
•   You could end up paying more to the HMRC if your output tax is more than your input tax.
NextGen Accounting provides support and advice on all matters relating to VAT for our clients, and can help you with registration, choosing the correct scheme, VAT returns, and more. Contact us today for more information.