VAT registration can be a confusing area for many businesses. Join our Sage City community to speak with business people like you. He has vast experience in start-up and turnaround situations, as well as the enterprise sector. Your email address will not be published. If you are registered for VAT, whether compulsory or voluntary, you need to submit VAT returns for the registration periods which are mostly every two … VAT minimizes tax evasion due to its catch-up effect. Whilst there is no legal obligation to register for VAT until annual turnover exceeds the ‘VAT threshold’, which is currently £85,000 (2021/22 tax year), voluntary VAT registration can provide many professional and financial benefits, including reclaiming VAT, boosting your corporate image, and opening doors to more business dealings and opportunities. Your business will be eligible for VAT refunds if … When in doubt, please consult your lawyer tax, or compliance professional for counsel. You can reclaim VAT you’ve paid on goods and services bought from other businesses. If you are buying a lot of materials or services yourself and being charged VAT on them then you would be able to claim that VAT back if you did a voluntary registration. The official government advice is: There’s a time limit for backdating claims for VAT paid before registration. The Company Warehouse is a registered user of Companies House Electronic Filing Service. If you fail to register your business within 30 days of reaching this threshold your business will be liable for a penalty for failure to notify. However because of the problems and issues associated with VAT registration the majority of people find it easier to use an agent. VAT is an indirect taxation on the value added to goods and services by Suppliers and Vendors in the economy. If i make no sales, do I still have to pay the taxman because i am registered voluntary. Required fields are marked *, You may use these HTML tags and attributes: . Small businesses might be tempted to put off VAT registration for as long as possible but if you have ambitious growth plans, sooner or later, you will have to comply. Responsibilities of businesses that voluntarily register for VAT. This article and related content is provided on an” as is” basis. If your turnover exceeds the VAT threshold during your first year of trading, you will only be liable for VAT from the date of registration and not on sales made before it became compulsory for you to register. Hi Andy, Your email address will not be published. There are pros and cons of voluntary VAT registration, and the decision to opt-in volutarily very much comes down to your particular business, as well as your own personal preferences. For more information on how Sage uses and looks after your personal data and the data protection rights you have, please read our Privacy Policy. one is a property agent and the other is a real estate investment fund based in Cayman. Next generation HR & Payroll in one powerful yet simple solution for medium to large businesses. I registered VAT voluntarily as Non Established Taxable Person (NETP). There is a case to be made for voluntary VAT registration, if your business records revenue of 50% of the threshold, you can apply to become a voluntary VAT vendor. Explore all Sage Partner Programme opportunities, Sign up to become a certified partner today, Sales and marketing tools, support and more, Developers and independent software vendors, Access support articles and product documentation, as well as the latest software downloads and updates, Ask questions and share product tips and tricks, See learning options to get the most value from your solution, Check out the latest resources and information. You’ll appear to be a bigger business if you’re charging VAT, as the current limit for compulsory … And there are several business benefits to doing so. Compulsory registration A trader is liable to register for VAT if the value of taxable supplies exceeds or is expected to exceed $1,000,000.00 within a period of 12 months. Manage invoicing, cash flow, VAT, payments & more from any device in the cloud. So in this case I’m in an advantageous position if I don’t register for VAT, right? Businesses with a turnover in excess of the VAT Registration Threshold (currently £85,000 P.A. You must pay HMRC any VAT you owe from the date they register you.. Get an exception. Can I voluntarily regester for VAT and get VAT paid for invvoices I have submitted for last four years? Third Party Formations Limited T/A The Company Warehouse | A Company Formation Agent Registered in England and Wales. Submit VAT Returns. Hi Georgie, Advantages of deregistering for VAT Maintaining your VAT inclusive prices as long as it doesn't take you over the threshold again and as long as your customer is happy to continue paying the same price You may get more customers because you charge less than a business which is VAT registered No more deadlines for submitting VAT returns I don’t have UK bank account. If you have any questions please give us a call on 01245 492777, Hi As you can see from the above examples, there is clearly a cash flow advantage in voluntary VAT registration. The amount I submit is difference between output tax and input tax or tax rate x revenue ? You will still need to complete a VAT return to show this and establish that you do not owe anything. VAT is nothing new and nothing to fear. They won’t mind this if they are VAT registered but probably won’t like it if they aren’t. I provide 1-2-1 pre-start consultancy services, if you are interested please get in touch. This article and related content is not a substitute for the guidance of a lawyer (and especially for questions related to GDPR), tax, or compliance professional. Keep records and an account for your VAT. Whilst the general rule is that taxable supplies have to be made to be able voluntarily to register for UK VAT there is in fact another way, though a rare one, in which an entity can qualify, and that is to make acquisitions of goods from the EU. Since the £85,000 figure for VAT registration is a legal threshold, the discussion of the advantages/disadvantages of VAT registration seems irrelevant. If you are planning on investing a lot of money it will be worth sitting down with an accountant to go over what you are doing. By partnering with a trusted and experienced business partner like Sage, you can ease into compliance and proactively get your systems, processes and skills in order before the taxman comes knocking. If your turnover is relatively close to the VAT registration threshold then you may inadvertently not realise if you do breach the threshold, which could cause you to be charged with late VAT registratio… You will be able to recover the input VAT on any purchases made in relation to your trade. This is because once you have a VAT number, nobody will be able to easily tell if your business’ turnover exceeds the VAT registration threshold. VAT in the GCC: Advantages of voluntary registration. However the general principle is that once you are registered (whether voluntarily or not) for VAT you need to charge VAT on any sales you make. VAT. Let’s understand the business benefits of voluntary VAT registration. You can register voluntarily if your business turnover is below £85,000. Run your entire business, including finances, sales and inventory with anytime access with cloud connected functionality. Advantages of Voluntary Tax Registration. If my turnover does exceed the limit, will I still be liable for VAT on sales made before I was forced to register? You are really going to need to speak with a qualified accountant about this. If I do, will I be penalised by HMRC for late registration? With Sage Business Cloud Accounting, you spend less time on admin and more time growing your business. I’m starting a new business, i don’t think i will be exceeding the vat threshold, but I’m considering volunteering for vat. Upon registration, vendors are given a unique VAT vendor number that will need to be included in all future invoices, receipts, quotations, and correspondence with SARS. The rules on claiming back VAT depend on what the VAT is on. The actual size of your business will be disguised even if you are nowhere near the £81,000 threshold. The first advantage of being VAT Registered is that small businesses can give the appearance of being bigger and more established. Value Added Tax (VAT) is the sales tax levied against goods and services within the UK. If you need help with the VAT return please give us a call on 01245 492777. If your customers are VAT registered businesses they will be able to reclaim the … Gain full control with smart, cost-effective software for managing businesses. Accordingly, Sage does not provide advice per the information included. As a company formation agent we have plenty of experience helping people voluntarily register for VAT and getting the registration done correctly the first time. Should you apply for voluntary VAT registration ? 3,420. Charge VAT (and charge the right amount!) However, when you register for VAT with HMRC one of the questions they ask is whether you are likely to be claiming back more VAT than you pay. This may differ from the amount you can claim back depending on how much you buy and sell. The added credibility for your business. Entitlement for input tax deductions Being Vat registered entitles the business to claim input deduction. As well as being able to reclaim VAT on costs, some other benefits of voluntarily registering for VAT may include: 1. Benefits of Voluntary VAT Registration. Subscribe to the Sage Advice newsletter, and receive our latest advice direct to your inbox. Aaron was the Regional Director for Sage Middle East. If you want to give us a call on 01245 492777 we can try and give you some more detailed information. One of the greatest benefits of voluntary VAT registration is that when you are expecting a payment from a business partner who happens to be VAT registered, you will get the chance to get back VAT. Dear Sir, If your e-commerce business has a taxable turnover of more than £85,000... EORI number. South African Companies that are registered for VAT must charge an additional 15% on the prices of their products and services. Once a business is VAT registered it can charge VAT on goods and services sold to customers and also reclaim VAT charged on goods and services purchased for the business from other businesses, suppliers etc. While collecting tax on behalf of the government should not be seen as a cost to the business, there are implications in terms of processes, systems and people that could incur some expenses, so it makes sense that they would avoid compliance for as long as legally possible. 6 months for services. Get the answers to these questions and more, in our free e-book. VAT, or Value Added Tax, is one of the things all businesses need to be aware of. But there’s a case to be made for voluntary VAT registration and if your business records revenue of 50% of the threshold, you can put your hand up to become a voluntary VAT vendor. Hi, I am starting an e-shop, where many of my items will be coming from China, and therefore will be liable to import tax, duty and (I think) automatically the corresponding VAT of China. Planning. It’s important, for example, to understand what the ‘VAT threshold’ is and when you need to register for VAT. Please do not copy, reproduce, modify, distribute or disburse without express consent from Sage. If you do opt for VAT registration and plan on shipping goods … Advantages. Copyright © 2003-2021 Third Party Formations Limited. It all depends on the type of products/services you were using for your business. All rights reserved, The Advantages Of Voluntary VAT Registration For Small Business. From your date of registration the time limit is: 4 years for goods you still have, or that were used to make other goods you still have This article and related content is provided as a general guidance for informational purposes only. Once you are registered you have to charge VAT and regularly make VAT returns and payments. I am not sure if I will exceed the 81,000 threshold, but I feel that I must register on a voluntary basis, because I can claim back the VAT of China. The basic principle is that if you are VAT registered you can claim back The VAT on any business costs. Can you advice me? Would being VAT registered at the start allow me to reclaim that initial VAT paid out (after each quarter) and so basically leverage my capital better? Hi Austin, How will it affect your business? If you want to discuss this in more depth please give us a call on 01245 492777. Start-up and small businesses whose revenue does not match the threshold are probably breathing a collective sigh of relief. Although companies with taxable supplies in the range of AED 187,500 to AED375,000 have a choice to register for VAT, companies will have certain advantages if they register for VAT and file returns periodically. If you have made absolutely no sales then there would have been no VAT to collect and nothing to pay to the taxman. It should not be confused with “Income Tax”. In other words, the VAT that is paid on your purchases can be claimed as input … So there is nothing to lose in voluntarily registering your business for VAT. The benefits and disadvantages of VAT registration The basics of mandatory VAT registration. This is known as ‘output tax’. Voluntary VAT Registration Benefits. If I’m paying 20% VAT – it would mean I effectively need 20% more capital to start with. Conceals a business's turnover from clients. It makes no difference whether you registered voluntarily or reach the threshold. Avoiding Financial Penalties – No one likes to get an angry letter from the taxman. Save my name, email, and website in this browser for the next time I comment. I’m Vietnamese but I set up to run online business in the UK. Take control of all your business processes with a unified business management suit from ERP, financial, operations, payroll & HR. I am an IT contractor but the turnover is well below the threshold. This may not seem too exciting, but your business can benefit … 2. This article and related content is the property of The Sage Group plc or its contractors or its licensors (“Sage”). What Are The Benefits of Voluntary VAT Registration? A few good reasons to do that are listed below. Voluntary registration for acquisitions from other EU states. By leaving a comment on this article, you consent to your comment being made publicly available and visible at the bottom of the article on this blog. We can arrange this if you give us a call on 01245 492777. You can voluntarily register at any point. Considering setting something up which requires a capital investment (Vat rated goods – materials, tools and services) but which will not generate sales for maybe a few years. my question is 1. Hi Phil, The new law has come as a shock to many businesses – especially small enterprises – who are accustomed to operating in a low-tax environment. They are wary of businesses doing this so you may find that they ask a lot of questions about your business. Pros of VAT registration You can charge VAT on the goods and services you sell. Voluntary registration But why would businesses who are under this threshold decide that it might be beneficial to register for VAT anyway? Also, my sales (white paints) include other EU countries, mostly governmental bodies (like a supplies for a municipality etc), which are by definition no oblige to pay VAT. what are the important for vat registration. Can you help me to solve following issues: if i charge vat, but i do not exceed the threshold amount, what happens to the vat charged ? Although VAT registration is required by businesses with a taxable turnover above the threshold it is still possible to voluntarily register your business for VAT. However this may not be the case in the following situations: Where a business makes mixed supplies for VAT purposes and partial exemption applies. As compared to other taxes, there is a less chance of tax evasion. I will get one of our consultants to send you an email about registering for VAT. Once voluntarily registered for VAT you need to abide by the same rules as another other VAT registered business. Some of the key benefits are as follows: Instill Confidence. Many small businesses and start-ups have a turnover under the £85,000 VAT registration threshold but still choose to register for VAT. This is possible for every or some of the purchases you’ve made. Value-Added Tax is commonly known as “VAT”. However, you may be eligible to apply for ‘voluntary VAT registration’ and one or more VAT schemes. Some are legally required to register for and pay VAT, whilst for other businesses it is a voluntary matter determined by certain advantages and disadvantages attached. Voluntary registration. A business using the scheme for its first VAT period can claim pre-registration input tax on this return in the same way as a non-scheme user as considered above. Hi, Whilst your email address will not be publicly available, we will collect, store and use it, along with any other personal data you provide as part of your comment, to respond to your queries offline, provide you with customer support and send you information about our products and services as requested. Voluntary VAT registration. This might be seen as one of the disadvantages of voluntary VAT registration, but in truth it is one small hurdle. Voluntarily registering as a VAT vendor secures your place in the supply chain and contributes to a healthy cashflow. Pay any VAT due to HMRC. Of course you would also need to charge VAT to the company you sub contract for. It will take some adjustment and some learning but the additional revenue flowing into GCC nations will go a long way to maintaining effective public services and positioning GCC countries as globally competitive nations with truly diversified economies. Order VAT Registration online today or contact one of our business consultants on 0800 0828 727 for more support. This means keeping proper records, invoices and submitting a VAT return every quarter. The good news is, our start-up and fixed fee accountancy services include support with filing VAT returns and can be tailored to suit your business. Once you are registered, you can make payments through the various SARS branches, eFiling site, debit orders or any of the major banks. Choosing the right business structure will save you time and ensure you understand how to maximise your expenses and allowances so that you retain as much as of your profits as possible, pay less tax and stay within the rules. This is known as ‘input tax’. And how can you stay compliant? He is passionate about forging strong alliances and developing world-class teams. 2020-2021) are required by law to complete a VAT Registration with HM Revenue & Customs. As long as you are under the threshold there should be no late registration penalty. Because I just found out my big misunderstanding that voluntary registration also means charge no tax. It’s also important to consider what benefits you might get from registering even if you are below the threshold. It's the place to ask questions and share experiences. The Benefits of a Voluntary VAT Registration Being registered means you need to start submitting VAT returns so the benefits need to outweigh the extra admin burden. So yes you would be able to claim back the 20%. From 1 January 2018, any business operating in the Gulf Cooperation Council (GCC) group of nations that earns revenue of Dhs 375,000 or more, will be legally required to register as a value-added tax (VAT) vendor. If you need help with your startup then let's talk. There are a few benefits of voluntary VAT registration which make it quite appealing for small businesses. If your taxable turnover is below £83,000 (from 1 April 2016) you don’t have to register for VAT. It is a big decision and not one that should be done without getting some expert advice. Hi, However, for companies that seek voluntary VAT registration, there are a number of advantages to gain (of course, these also apply to companies who are legally required to register for VAT): about VAT in the GCC: Are your accounting systems ready? As a charity, you must register for VAT with HM Revenue and Customs (HMRC) if your VAT taxable turnover is more than £85,000. Sage makes no representations or warranties of any kind, express or implied, about the completeness or accuracy of this article and related content. I do not want to register for VAT unless my turnover exceeds the limit. I sub contract to a window firm in the UK would I benefit from being voluntary vat registered ? Elevates business status among competitors. This is an area where you really need to speak to an accountant and check exactly what you will be able to claim back in terms of import duties etc as this is a fairly complex and specialist area. Alternatively you can give us a call on 01245 492777. Following are the advantages of VAT: 1. Here are some of the advantages: You Business Will Look Larger But with falling oil prices and increasing global competition, GCC countries need to diversify their economies and find new revenue streams if they want to remain competitive. Hi I would like to ask how to register VAT for a business we are about to start. If things did not go well, would that VAT refunded ultimately be due if the business never really takes off. Does it mean I still have to charge customer VAT standard rate (my product falls into standard rate product) and submit return for HMRC ? Advantages of Voluntary VAT Registration There are numerous advantages to preemptively registering your business for VAT before reaching the threshold. You get a VAT registration number. about VAT in the GCC: What does it mean for your business. If your customers are mainly VAT registered businesses and if you are incurring VAT on a number of your business expenses, it generally makes sense to consider registering voluntarily for VAT. Businesses that are registered as VAT vendors may be perceived as being more professional and therefore more appealing to partners. What is VAT? i.e I would pay out a lot of VAT in years 1 and 2 but revenue would be trivial or zero in that time. VAT registration is therefore an important part of small business.
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