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The VAT registration threshold can be a cliff edge for many businesses, as once the business turnover exceeds that threshold it must charge VAT on all eligible sales.

For your UK sales, you must check the cumulative total of your VATable sales (including zero-rated items) for every 12-month period, and register for VAT within 30 days once this total exceeds £85,000.

Do this calculation every month, as if you tally-up your sales just once a year for your accounts, you may miss this 30-day deadline. If your sales suddenly take off, you may be too busy to remember to register for VAT within 30 days. If you register later than the law demands, you can suffer a penalty.

For this reason, you may wish to register for VAT earlier than needed. Early registration allows you to claim back VAT on your start-up expenses. You can reclaim VAT on services used within the six months before your VAT registration date, and on goods acquired within four years before that date (if they are still held at the date of registration). The VAT paid on an expensive shop refit could be lost if you delay VAT registration too long.

However, it’s a balancing act – if you register earlier than required, you must account for VAT on sales made after your registration date, which could have been VAT-free.

You can't change the VAT registration date requested once you've applied to register. It's very important to plan ahead for your VAT registration, to ensure the registration date falls at the optimum time for your business.

Businesses which sell digital services (such as eBooks or software) to non-business customers in other EU countries are strictly required to register for VAT in those other EU countries. To avoid multiplying the VAT administration up to 27 times, these digital sales are accounted for through VAT MOSS (Mini One Stop Shop) on the gov.uk website. We can help you with this.

Action Point!
Check your total sales on a 12-month rolling basis.

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Clarke Nicklin House, Brooks Drive, Cheadle Royal Business Park, Cheadle, Cheshire, SK8 3TD. Registered Number OC309225.
The firm is registered to carry on audit work in the UK & Ireland. Details about our audit registration can be viewed at www.auditregister.org.uk under reference number C001178544. The professional rules applicable are the Audit Regulations and Guidance which can be found at www.icaew.com/regulations, and the International Standards on Auditing (UK and Ireland) which can be found at www.frc.org.uk/apb/publications/isa.cfm.