Any tame accountants? VAT threshold Q...

[manalishi]

Have been puzzling over the VAT threshold issue, and am just checking that I've got the right end of HMRC's stick. On the HMRC Web site I read:

"If you supply goods and services both inside and outside the UK, then you may need to register for UK VAT if your UK trade alone exceeds the registration threshold.
You don't need to include supplies you make to other countries when calculating your VAT taxable turnover for registration purposes - so leave out of your calculation any goods you supply to other countries, including distance sales, and any services you supply where the place of supply is another country rather than the UK."

My total turnover (a mail order Web site) is now rather close to the £68000 threshold, and I was dreading the idea of registering. But I've now done a careful calc of how my revenue is split: UK, rest-of-EU and rest-of-World. And under £50,000 is from the UK, so I need not register (yet).

Anyone here able to confirm that my understanding is correct?

Have asked at an otherwise useful business forum, but the accoutants seem to be AWOL, and my own is also away.

 

[Mudster]

Seems clear to me, UK sales only

Also be aware that the 12 month period is rolling and not your accounting period.

As export sales generally don't attract VAT they are ignored for turnover purposes.

HMRC are very helpful on the phone, if you are at all unsure, ask.

 

[fuzzer]

be warned...

if you go over the threshold and arent vat registered , if audited you are liable for all the amount of VAT you should have been charging regardless if you have charged it or not.

 

[S207]

You are correct. If you ever need to register for VAT you may be able to apply for one of the Flat Rate schemes which make the admin very much easier.

 

[manalishi]

fuzzer - yup, understand that. One of the reasons I don't want the VAT hassle is the sheer number of very onerous issues.

Mudster - yup, I currently do a 12-month rolling report. And now I understand this threshold bit, I'll change my reporting spreadsheet to separate out the UK sales from the non-UK.

Thanks guys

 

[manalishi]

You are correct. If you ever need to register for VAT you may be able to apply for one of the Flat Rate schemes which make the admin very much easier.

Yes, I had a look at those flat rate schemes. May not suit my type of business (B2C sales). I'll cross that bridge when I get to it.

 

[tromppost]

As Mudster said, HMRC are very helpful on the phone...give them a call.
The flat is great for some but may not suit you as you have to pay on takings even the money from abroad that you did not charge vat on.

 

[Mudster]

You do have a three month grace period in which to register if you feel you are about to or have passed the threshold.

You also don't need to register if you know you will be under the threshold long term even if you exceed it for a short period of time.

However, if your sales are steadily increasing to a point where registration is a necessity, then you are obliged to register even before you've passed the threshold if your trading indicates you will pass it and continue to trade at or above the threshold.

HMRC are not scary as long as you are straight with them. When I first started undertaking international transactions their helpline was very helpful indeed.

 

[Beetnik]

You are correct. If you ever need to register for VAT you may be able to apply for one of the Flat Rate schemes which make the admin very much easier.

but take care - easier admin but pay more!

 

[manalishi]

It's all very trying I downshifted a couple of years ago and although I'm happy that the business is growing, VAT is the sort of over-complicated hassle I really want to avoid.

In general, I'm trying to decrease my 'tax footprint'. Wonder if HMRC's helpline will give advice on that?

 

[Benzowner]

I would phone the VAT office and ask if I were you. Export sales are included on a VAT return, so maybe included in the turnover threshold. Once you have filled in export sales on a VAT return, you will receive another form where you will neet to fill in the VAT numbers of your oversea clients and value of sales.

 

[flango]

I can't understand why people think VAT is hard I do all our returns, checked by our accountant before they go but dead easy. Mind you I try and claim the maximum, whilst he always errs on the side of caution so between us it works well.

We have been in the position of a not vatable business and I'll tel you what trading as a limited company and VAT registered is much better and opens up a load of business we previously could not get into so there is a + side to being VAT registered.

 

[Gridlock]

In general, I'm trying to decrease my 'tax footprint'. Wonder if HMRC's helpline will give advice on that?

A noble cause.

 

[manalishi]

I would phone the VAT office and ask if I were you. Export sales are included on a VAT return, so maybe included in the turnover threshold. Once you have filled in export sales on a VAT return, you will receive another form where you will neet to fill in the VAT numbers of your oversea clients and value of sales.

Did you read the (direct) quote from HMRC that I posted above? For sure, export sales have to be accounted for separately once a company is registered. That's not my Q. But you're all right that a (hopefully) simple call to HMRC will get a definitive answer.

Flanaia1 - now can you see why it's confusing? Moreover, were my sales to other EU states to go over their own threshold, the distance selling VAT legislation means that I'd have to register for VAT in those countries, too!!!

I like my day job. I don't mind paying taxes. But I will resist becoming a slave to such monumental and moronic bureuacracy. It's a tax on my time (precious) as much as it is on my money (less precious).