20 things you need to know about VAT – part 1

20 things you need to know about VAT – part 1

One for each percentage point of the VAT rate. This is the first of a number of posts that will go through all 20 topics. Let’s get started.

1. Do you know the registration limits?

This is currently £73,000. When the value of your supplies gets to this limit you have to tell HMRC. You can find full details on VAT registration limits for 2011 and earlier years. There’s a good chance that it will change later this year. I’ll put the new limits on this site after they are announced.

Remember that you can register for VAT before you reach the registration limit. It might be worth it.

2. Telling HMRC you have gone over the registration limit.

You have 30 days from of the end of the month you went over the registration limit to tell HMRC. So, if your turnover in the 12 months to 29 February is over the registration limit you have to fill in the forms and send them to HMRC by 30 March.

You will be registered from 1 April.

3. What rate VAT do you need to use?

Do you know what rate of VAT to charge on what you sell? Are you sure? Really, really sure?

If you are selling goods to someone in the EU the VAT rate you apply will differ depending on whether your customer is a business or a private individual. If you sell services then the place where your customer belongs and whether they are a business will be important factors as to the rate of VAT you charge.

It’s important to get this right. Make a mistake and you may have to pay VAT to HMRC you are unable to get from your customer, and on top of that interest and penalties.

Another batch of things you need to know will appear in the next few days.

Got a question? Ask it using the comments system.

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