Are You Adhering To Your VAT Obligations?
Every business has the potential for VAT problems, which can normally be resolved by an expert in the field. Follow our guide to ensure that you’re managing your VAT properly. Need further guidance? Our accountants in Leeds are highly regarded in the field and can help.
The rules for VAT registration are the same for self-employed people as well as limited companies.
The basic rule is if your sales is going to be more than £82,000 in the next 12 months you should register for VAT. You shouldn’t wait until you pass the £82,000 if your monthly run rate is higher than £6,833 i.e. if right from the beginning, you think you will go above annual £82,000, you should register straight away.
You can still register for VAT even if your sales don’t go above £82,000. The reason why you may do this is to appear to customers bigger than you are.
The first thing you have to do when you become VAT registered is start charging VAT on your sales invoices i.e. 20% on top of your normal fee/price.
So your invoice looks like this on a fee that you are charging to a customer of £1,000.
The customer then pays you the £1,200.
You then have to make sure that you get VAT receipts for all your business expenditure so that you can claim the VAT back (only on option 1 and 2, see below).
However, if becoming VAT registered isn’t complicated enough, you are then faced with 4 options of how to account for VAT.
See the ‘VAT Returns’ section for these options.