{"id":9414,"date":"2022-04-30T06:59:46","date_gmt":"2022-04-30T05:59:46","guid":{"rendered":"https:\/\/www.qualitycompanyformations.co.uk\/blog\/?p=9414"},"modified":"2024-04-12T19:07:52","modified_gmt":"2024-04-12T18:07:52","slug":"voluntary-vat-registration","status":"publish","type":"post","link":"https:\/\/www.qualitycompanyformations.co.uk\/blog\/voluntary-vat-registration\/","title":{"rendered":"How does voluntary VAT registration work?"},"content":{"rendered":"
Voluntary VAT registration is available to any business that sells taxable supplies and whose turnover is below the compulsory VAT registration threshold of \u00a390,000. But why would you want to register for VAT and pay tax if you don\u2019t have to? Because there are many potential benefits to be had.<\/p>\n
In this post, we explain the difference between compulsory and voluntary VAT registration in the UK, how to register with HMRC for VAT online, and the reasons why VAT registration could be advantageous to your small business.<\/p>\n
Voluntary VAT registration gives businesses the right to register for VAT if their turnover is below the compulsory VAT registration threshold of \u00a390,000. This enables small businesses to enjoy the same benefits as their larger competitors.<\/p>\n
In the UK, VAT registration<\/a> is only a legal requirement if any of the following conditions are met:<\/p>\n If none of these apply to your business, you can register for VAT voluntarily. Unless everything that you sell is VAT exempt.<\/p>\n When you register for VAT, you will receive a VAT registration number. You can then charge VAT on the goods and services you sell and reclaim the VAT you pay on certain business-related purchases.<\/p>\n Any type of business can register for VAT, including:<\/p>\n VAT registration has nothing to do with the legal structure of your business. It is based on turnover and\/or whether the business sells taxable supplies<\/a>.<\/p>\n No VAT is charged on goods or services that are VAT exempt or those outside the scope of the UK VAT system. If all of your business supplies are exempt, you cannot register for VAT.<\/p>\n Choosing to register for VAT and pay tax when you don\u2019t have to may seem counterintuitive and bad for your bottom line. However, becoming VAT registered is extremely beneficial to many small businesses.<\/p>\n By registering for VAT, you will be able to:<\/p>\n The significance of these benefits will, of course, depend on your business and the taxable supplies you make. Tax efficiency and improving competitive positioning are the most notable advantages for the majority of small businesses considering voluntary VAT registration.<\/p>\n Whilst there are clearly many benefits to be gained from VAT registration, there are a few disadvantages to be aware of.<\/p>\n You will have more administration to deal with, which means that you may have to spend more time and\/or money on bookkeeping and accounting.<\/p>\n Moreover, if you sell products or services to customers who are not VAT registered, raising your prices to account for VAT could make your business less appealing.<\/p>\n Weighing up the pros and cons beforehand is an important consideration to ensure that VAT registration is the best decision for your small business,<\/p>\n You can cancel your VAT registration<\/a> online or by post if your VAT taxable turnover is below the deregistration threshold of \u00a388,000.<\/p>\n If you stop trading altogether, stop making VAT-taxable supplies, or join a VAT group, you are legally required to cancel your VAT registration within 30 days.<\/p>\n The majority of businesses can register for VAT with HMRC online. The process and requirements are exactly the same for compulsory and voluntary registration.<\/p>\n To register for VAT<\/a>, you will need to provide details about your business, including:<\/p>\n When you register for VAT online, you will create a VAT online account (sometimes referred to as a \u2018Government Gateway account\u2019) at the same time. You will use this to file your quarterly VAT Returns with HMRC.<\/p>\n Within approximately 30 working days of registration, you should receive a VAT registration certificate (though sometimes it takes longer). This will contain your VAT number.<\/p>\n If you register online, your certificate will be sent to your VAT online account. If you register by post or through an agent, it will be posted to your business address or registered office<\/a>.<\/p>\n At Quality Company Formations, we provide a VAT Registration Service<\/a>, which is available to limited companies and limited liability partnerships with turnover above or below the VAT registration threshold.<\/p>\n Making Tax Digital (MTD) is an HMRC initiative designed to simplify tax accounting for individuals and businesses.<\/p>\n Since 1 April 2022, all VAT-registered businesses are legally required to sign up for Making Tax Digital for VAT<\/a> and use compatible accounting software to:<\/p>\n Prior to this date, businesses who voluntarily registered for VAT were exempt from Making Tax Digital.<\/p>\n We hope that this post has shed some light on voluntary VAT registration, the benefits it can offer to your small business, and how to register for VAT online.<\/p>\n If you have any questions about becoming VAT registered or would like to know more about our VAT Registration Service, please contact our team of experts on 020 3908 0044 or leave a comment below.<\/p>\n \n
Who can register for VAT?<\/h2>\n
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Benefits of being VAT registered<\/h2>\n
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Are there any disadvantages of VAT registration?<\/h2>\n
Can I cancel my VAT registration if I change my mind?<\/h2>\n
How to register for VAT voluntarily<\/h2>\n
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Do I need to use Making Tax Digital for VAT?<\/h2>\n
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Need help with your VAT registration?<\/h4>\n