Does a limited company have to be VAT registered?

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VAT, or value added tax, is a consumption tax placed on goods or services that are sold or provided. Any VAT that a business collects is payable to HMRC on a three-monthly basis.

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Registering for VAT

It is not automatically mandatory for limited companies to register for VAT; however, registration does become mandatory when a business exceeds a certain sales value threshold. The current threshold is £90,000 of VAT taxable turnover accrued within a 12-month period.

Registration must take place within 30 days of meeting or exceeding the threshold, or in circumstances where the expectation is that the threshold will be met or exceeded within the forthcoming 30 days.

The standard rate of VAT in the UK is 20%, which is applicable to the majority of goods and services. Power and energy are taxed for VAT purposes at a reduced rate of 5%, while 0% VAT – or a VAT exemption – applies to healthcare, education, food, drink, charities, and food and drink for the purposes of human consumption.

Although there are prerequisites for registering a business for VAT, limited companies can voluntarily register even if they do not meet the taxable turnover threshold.

A VAT registered business has many obligations to HMRC that it must fulfil, including – but not limited to – ensuring VAT is incorporated into pricing at the correct rate, keeping records, and accounting for VAT on any goods imported into the UK

Accountants

VAT can be an extremely complex field, so businesses must ensure they instruct someone who has the experience and professionalism to deal with the issue in an efficient and thorough manner.

Business accountants Oxford, such as https://www.hazlewoods.co.uk/expertise/business-accountants/oxford, can assist businesses with all aspects of VAT management. They can also help with the management of other taxes, such as income tax and corporation tax.

By instructing professional accountants to look after your business’s financial affairs, you can ensure correct governance and compliance and the smooth running of your business in line with HMRC requirements.