VAT Registration - When should I register?

Your business should register for VAT if your "taxable supplies" over the past 12 months has exceeded the VAT registration threshold. The threshold is currently £67,000 (as of 1st April 2008). It is important to remember that VAT applies to the company's turnover, not profit.

"Taxable Supplies" are any goods and services that are subject to VAT at any rate, including zero rate.

So, if at the end of any given month, the total value of all your taxable supplies over the previous 12 months exceeds £67,000, you should register for VAT. Additionally, you should also register if you expect your turnover to exceed £67,000 over the next 30 days.

Even if you don't have a legal requirement to register (i.e. your annual turnover hasn't exceeded the VAT threshold), you may voluntarily decide to register for VAT.

Being VAT registered may help give the impression that you run a larger company than is the case, and this may improve your company's image with clients. If you are VAT registered, you can also claim back VAT you've paid on any business purchases.

You can read about the VAT registration process in detail at the HMRC site here.

You can register for VAT by filling out one or more HMRC forms, or simply do it online. Full details are here.

Alongside the "standard" VAT scheme, you may also be interested in the Flat Rate VAT Scheme, depending on your business circumstances. Follow the links below for more information.

Further VAT Resources on Bytestart

VAT Registration - Tips and Traps

Overview of Value Added Tax

Overview of the Flat Rate VAT Scheme

Overview of the VAT Cash Accounting Scheme