business: VAT registration


the registration process


“To register for VAT you must complete a form, VAT 1 (and VAT 2 for partnerships), and send it to the VAT Registration Unit,” advises Glen. “You can also register online. The VAT office will process your application and send you a certificate of registration showing your full registration details. Details of your VAT registration should be displayed on your business invoices. VAT returns must be filed online and any VAT payable paid electronically.”


“You usually submit a VAT Return to HMRC every three months,” Glen adds. “This period of time is known as your ‘accounting period’ however you can also request to receive monthly or annual VAT Returns.


“The VAT Return records your total sales and purchases, the amount of VAT you owe, the amount of VAT you can reclaim and what your VAT refund from HMRC is. You must submit a VAT Return even if you have no VAT to pay or reclaim.”


As employees, many of us remain blissfully unaware of the sheer amount of paperwork involved in the day-to-day running of a business. A move to owner status means you are accountable for keeping records, data and expenses up-to-date, which can be overwhelming. Despite the digital age alleviating some aspects of administrative tasks, with a myriad of software and online resources available, even the most business- savvy of individuals can benefit from expert guidance. In terms of VAT, speaking face-to- face with a professional from the financial world will prove beneficial and reassuring.


“Professional help with your first VAT return is always advisable,” says Glen. “You can then make the decision to continue to use a bookkeeper/accountant or complete the return yourself. [I would advise] talking to a chartered accountant for further advice. Local accountants can be found at the ICAEW (Institute of Chartered Accountants in England and Wales) website – www.icaew.com – under business advice service.”


deregistration


With the economic climate in a constant state of flux, or whether affected by personal or professional events, many reasons can ultimately result in a business’ turnover declining. If this happens, are you able to deregister for VAT?


“If you register for VAT and your circumstances subsequently change, it may be possible to deregister your business. So


With over 25 years’ experience, Glen Wood is Director of Stopfords Associates, specialists in chartered accountancy and business development services.


If you would like more information about whether you should be VAT registered, contact


Stopfords Associates on 01623 420 269 / 01246 385 385 or email theteam@stopfords.co.uk w: www.stopfords.co.uk @StopfordsChes


yes, you can deregister your business if its turnover or taxable supplies will not exceed the deregistration threshold (£80,000) in the next 12 months,” says Glen. “If you registered voluntarily and your business has not yet reached this threshold, HMRC should have no objection to your deregistration. But if your turnover has previously exceeded the threshold, you may have difficulties persuading HMRC that it will fall during the coming year.


“You are obliged to deregister your business if it stops making taxable supplies. You may also have to deregister if the legal structure changes, or if the business is sold – although the new owner can choose to keep the registration number in some circumstances.


“You must cancel your registration if you’re no longer eligible to be VAT registered. For example [if] you stop trading or making VAT taxable supplies or you join a VAT group.


“You can apply to cancel your VAT registration online, through your VAT online account or by post, using form VAT 7. You must do this within 30 days of your reason for cancelling the registration or you may be charged a penalty.”


ask the experts


The subject of VAT is multifaceted, so thorough research into the process of VAT registration and how this will ultimately affect your business is a must. In addition to online guidance available at such sites as www.gov.uk, always consult a professional who will be able to explain more about the topic, what is involved and the different options available to you.


“VAT is a complex area of taxation and we are only giving an insight to specific questions raised,” says Glen. “We would therefore advise that you take professional advice before making decisions in respect of value added tax.”


“VAT registration is a big step for any business,” he concludes. “Many business owners considering voluntary registration are put off by the prospect of increased paperwork and the potential for a hefty bill from HMRC. But VAT registration can also be a good financial decision. Make sure that you properly consider all potential outcomes, and seek advice from your accountant beforehand.”


GUILD NEWS 141


Image © iStock.com/marcyano


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