Friday 19th June 2009 Blog

Beware the VAT Threshold

 Even if your clients business is not registered for VAT, they need to be aware of the point where their total sales require them to become VAT registered. This threshold is currently total sales of £68,000 for any 12 month period ending on or after 1 May 2009.

If their annual sales are near this limit they need to calculate their total turnover for the last 12 months, every month, adding the latest month and subtracting the earliest month each time, to check they haven't breached the threshold. Alternatively, if they believe their sales for the next 30 days will exceed £68,000 they must register for VAT immediately.

There are several advantages of keeping sales below the VAT threshold:

- Your client doesn't have to register for VAT, but they can if they wish to.
- If your client is not registered for VAT, their customers do not pay VAT on top of their basic prices. This makes your clients goods and services appear to be better value for money for non-business customers or other small non vat registered businesses.
- On your clients 2009/10 self-assessment tax return, which will be issued in April 2010, your client will only have to complete three lines to report their business profits.
- Your client does not have to submit their VAT returns online.

Currently a small percentage of VAT-registered businesses submit their VAT returns online each quarter. But for periods starting after 31 March 2010 all VAT-registered businesses with a turnover of £100,000 or more will be compelled to submit their VAT returns online. Also any business that becomes VAT registered after 31 March 2010 will also have to submit all their VAT returns online, whatever its turnover.

If you become VAT registered before 1 April 2010 you will not be forced into online filing straight away, as you will be able to continue with paper VAT returns until your turnover exceeds £100,000, or the law is changed.

There are of course penalties for failing to register on time so care does need to be taken.

Posted by: Bookcert Mentoring Team

Friday 19th June 2009

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