HMRC launches new VAT registration estimator
HMRC launches new VAT registration estimator
HMRC has launched a digital tool to help businesses estimate what registering for VAT means for them.
The VAT Registration Estimator has been developed after small businesses suggested that an online tool would be helpful to show when their turnover could require VAT registration and its effect on profits.
A VAT-registered business must charge VAT on eligible sales and can usually reclaim it on eligible purchases. There are around 300,000 new VAT registrations each year.
The VAT Registration Estimator is designed to be a ‘guidance tool’ to help businesses decide if VAT registration is required and allows users to experiment with different inputs and outputs, although it doesn’t provide bespoke business advice.
The estimator will be available 24/7 and is designed to reduce calls to HMRC helplines for general enquiries about VAT by small businesses.
A business must register for VAT if:
• their total VAT taxable turnover for the previous 12 months is more than the VAT threshold.
• they expect their turnover to go over the VAT threshold in the next 30 days;
• they are an overseas business not based in the UK and supply goods or services to the UK (or expect to in the next 30 days) – regardless of VAT taxable turnover.
The estimator can help businesses to see what registering for VAT could mean. It is also a useful tool for businesses operating below the threshold and considering voluntary registration.
How to use the VAT Registration Estimator
Before you start you will need information to hand about your business income and costs, and the VAT rates that apply to them. Although the estimator is free to use, and it should take around 20 minutes to complete – it would still be worth discussing with an accountant, here at Kennedys Accounting, we will be pleased to assist before you have signed up to a VAT scheme – VAT can be complex and there are also various schemes that may benefit certain businesses.