VAT Registration and Filing

You must register for VAT if: ● Your taxable turnover in the past 12 months exceeds the £90,000 VAT threshold. ● You expect your turnover to exceed £90,000 in the next 30 days. Additionally, you must register for VAT regardless of your taxable turnover if: ● You are based outside the UK. ● Your business headquarters are outside the UK. ● You supply any goods or services to the UK (or plan to do so within the next 30 days). Businesses based in the UK trading below the threshold can choose to register voluntarily in order to reclaim input VAT.

Once all required documents are prepared, you can submit an online application through HMRC's website. Processing usually takes up to 30 working days, but this may vary depending on HMRC's review process and the completeness of the application.

In the UK, you can choose to file VAT returns monthly, quarterly, or annually, depending on the size of your business and your preferred reporting frequency. Generally, we recommend quarterly filing.

VAT rates vary depending on the type of goods and services. The main VAT rates are: Standard Rate (20%), Reduced Rate (5%), Zero Rate (0%) and Exempt Supplie. Please consult TB Accountants for specific advice.

Yes. Once you’re registered for VAT, you must submit VAT returns even if you have no VAT to pay or reclaim.

● Retrospective VAT Charges: HMRC can backdate VAT liability, requiring businesses to pay VAT on all past transactions that should have been taxed. Late payments may also incur interest and late fees.

● Fines: The penalty varies depending on how long VAT registration has been overdue and the sales revenue during the period of non-compliance. The fine can range between 5%-15% of the VAT owed, or higher in severe cases.

HMRC uses a points-based penalty system for late VAT submissions. Each late submission will accrue a penalty point. Once a business reaches the penalty threshold of four points, a £200 fine is issued. Subsequent late filings will then incur an additional £200 fine.

From 1 July 2021, the UK introduced new VAT rules requiring online marketplaces (e.g. Amazon, eBay) to manage VAT on behalf of sellers: ● Marketplace Sellers: If selling through an online marketplace that meets VAT requirements, the platform is responsible for collecting and remitting VAT to HMRC. ● Direct Sellers: Businesses selling directly via their own websites must register, collect, and submit VAT independently. E-commerce sellers can reclaim VAT on purchases and, in some cases, obtain VAT refunds for exported goods.