I have gone over the Turnover threshold for VAT registration but I have not registered, what will happen?

I have gone over the Turnover threshold for VAT...

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Indications are that my turnover will exceed the threshold for VAT registration this year but I have not registered. Will I be getting a backdated bill?

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By Chris Smail
24th Feb 2010 12:06

Yes plus interest and penalties

When should you have registered?

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7om
By Tom 7000
24th Feb 2010 12:35

vat

yes you will...

 

you register from the first of the next month after you went over

 

so if you went over november ..you get december off and register from 1st jan

 

you should have charged vat from this point...maybe you can ask your clients to pay, they usually do if ither businesses. If you are retail...tough luck

 

[email protected] for more help

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Euan's picture
By Euan MacLennan
24th Feb 2010 12:42

Threshold

The registration threshold (currently, £68,000) applies to a rolling 12 month period - not the calendar year or your accounting year or the tax year.

You will be registered with effect from one month after the end of the month when you first exceeded £68,000 of turnover in the 12 months up to that month.  You will be charged VAT on 3/23 of your sales income up to 31 December 2009 and 7/47 of your sales after 1 January 2010.  You can claim a deduction for any expenditure incurred after your effective date of registration (and also on goods acquired up to 3 years previously, if still owned by you on the date of registration, and on business services incurred and not recharged up to 6 months previously) provided you have a VAT invoice from the supplier.

If you come clean fast, you may escape any further penalty - apart from paying over VAT on sales for which you did not charge VAT - but you will be charged interest automatically from the quarterly due dates until you pay over the VAT.

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By DMGbus
24th Feb 2010 14:07

Monitor your turnover & avoid the penalty

The wording of your query suggests that you that think that you "will" (in the future) exceed the VAT registration limit but possibily might not have yet done so.  If that's the case you can avoid the penalty by monitoring your turnover at the end of each calendar month.

So you need to have an accurate calendar month sales figures available and add up the rolling 12 months to last month end and keep doing the maths each month until you find that you've exeeded the VAT reg'n threshold.

So, if you've done a trunover of say £68,000 or less in 12 months to 31 Jan 2010 then you have no problems (providing same applied 12 months to 31 Dec 09, 30 Nov 09 etc.).

Now, if 12 months to 28 Feb 2010 shows over £68,000 or more (for the first time) the VAT consequences are:-

1. No back-dating of VAT liability

2. Notify HMRC using form VAT1 (or online equivalent) by 31 March 2010 to avoid penalty

3. Effectively VAT registered from 1 April 2010 (sales prior to this are VAT-free)

If you fail to meet the deadline (ie. notify within 1 month of acheiving registration limit) then there's a scale of penalty that will be applied.= (%age of VAT liability from date due to be VAT registered to the date that HMRC receive your application).   

There's also a "look 30 days ahead" VAT registration test, ie. if at anytime you predict or expect that in the next 30 days alone to exceed the VAT threshold then you have to be VAT registered from that very day and notioy HMRC via VAT1 or equivalent within a month of this expectation.

PS.  You can always voluntarily register for VAT - this eliminates any risk of late registration penalty but means that your sales will be liable to VAT before they need to be.  However if your customers can recover the VAT that you add to your invoices then you're likely to "in profit" VAT wise by registering for VAT so might consider voluntary registration.

PS.. VAT Registrations apparently currently take a month according to HMRC.

PPS. Don't forget to reclaim "pre registration VAT" according to the prescribed rules - in some cases the 6months (services) and 3 years (goods / assets) can affect the optimum date for voluntarily registering for VAT.

 

 

 

 

 

 

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By User deleted
27th Feb 2010 17:40

Great answer

Thanks, this is just the case for me. I can see that by the end of April I will be over the £68k. I will keep check on my sales and then notify the HMRC and register for VAT

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By occca
28th Feb 2010 08:23

12 month rolling

Have you kept a note of your turnover on a 12 month rolling period?  It's not based on the turnover in your accounts year

Assuming your year end is March you do the following :-

April - March

then May - April

then June - May

then July - June

etc, etc

 

 

 

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By User deleted
28th Feb 2010 12:48

Rolling turnover

yes thanks, I have kept a note of my rolling turnover

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