When business should register VAT?

Your business has exceeded the VAT registration threshold (new business started this time last year). According to the HMRC guidance, when they should be registered for VAT and when they should start collect VAT tax.

What HMRC Guidance says

The HMRC guidance says, "If you exceeded the VAT threshold in the past 12 months, you must register if, by the end of any month, your total VAT taxable turnover for the last 12 months was over £85,000. You have to register within 30 days of the end of the month when you went over the threshold. Your effective date of registration is the first day of the second month after you go over the threshold."

If the business genuinely had no clue they were going over and it was only my request for their bank download so that I could give them a turnover figure.

The compulsory registration section says that:

You must register for VAT if:

• You expect your VAT taxable turnover to be more than £85,000 in the next 30-day period.
• Your business had a VAT taxable turnover of more than £85,000 over the last 12 months.

You might also need to register in some other cases, depending on the kinds of goods or services you sell and where you sell them.

About VAT Schemes 

The Standard VAT Scheme is the default method, where businesses charge VAT on sales and reclaim VAT on purchases. VAT returns must be submitted quarterly.

The Flat Rate Scheme is designed for eligible small businesses. Instead of reclaiming VAT on purchases, businesses pay a fixed percentage of their VAT-inclusive turnover.

The Cash Accounting Scheme is beneficial for businesses dealing with late customer payments. VAT is paid only when the business receives payments from customers instead of when invoices are issued. This helps with cash flow management.

The VAT Annual Accounting Schemeallows businesses to spread VAT payments throughout the year instead of submitting quarterly VAT returns. Businesses make advance payments based on estimated VAT liabilities, and a single VAT return is filed annually.

If You’ll Exceed the VAT Threshold in the Next 30-Day Period

You must register if you realise that your total VAT taxable turnover is going to be more than £85,000 in the next 30-day period. You have to register by the end of that 30-day period. Your effective date of registration is the date you realised, not the date your turnover went over the threshold.

Seek Professional Help for VAT Matters

VAT registration dates can be surprisingly easy to miss, especially for growing businesses that don’t realise they’ve crossed the threshold until after the fact. Getting the timing wrong can lead to backdated VAT, penalties, and unnecessary stress.

At Elaga Accountancy, we have strong experience in VAT registration, effective dates, and dealing with HMRC guidance. We carefully review your turnover, assess your position, and help you register correctly — whether you’ve already exceeded the threshold or expect to do so soon.

If you’re unsure when you should register for VAT or worry you may have missed the deadline, don’t panic. A quick conversation can save you time and hassle. Talk to us now, and let us help you get VAT right from the start.

***Contact us to learn more.

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