New VAT registration estimator launched

HM Revenue and Customs has released a new tool to help businesses understand what registering for VAT may mean for them.

The VAT Registration Estimator has been developed following calls for an online tool to help SMEs see when their turnover would require them to register for VAT and its effect on profits.

HMRC says it is also useful for businesses operating below the threshold and considering voluntary registration.

Jonathan Athow, HMRC Director General for Customer Strategy and Tax Design, said, “We know that the majority of our customers want to get their tax right. We have listened to what businesses have said and the new tool is designed to help them understand VAT registration, including when they might be required to register.

“The VAT Registration Estimator has been developed in partnership with small businesses and trade representatives who tested the online tool and gave feedback before its launch.

“We hope it will support businesses’ understanding of VAT registration, especially when combined with our guidance and other services.”

Registering for VAT is compulsory if the following applies to you:

• Your total VAT taxable turnover for the last 12 months was over £90,000.
• You expect your turnover to exceed £90,000 in the next 30 days.
• You or your business is based outside of the UK (regardless of your annual turnover).

Being VAT registered means that you will need to:

• Add VAT to the price of all goods and services at the correct rate (currently 20%).
• Keep records of how much VAT you pay for things you buy for your business.
• Send a VAT return to HMRC each quarter – this should include the amount of VAT you charged your customers and the amount of VAT you paid to other businesses.
• Pay any VAT you owe to HMRC.

To learn more, take a look at our A Contractor’s Guide to VAT page.

To find out more about contracting please contact Jaime on 01442 795 100 or email jaime.thorpe@dolanaccountancy.com.