Whilst optional for small businesses, larger organisations with a sales turnover in excess of £70,000 per annum (currently) must register for VAT. This turnover assessment is based on a rolling 12 month period and not the business financial year so keeping a close eye on the growth of the business is essential as this level of performance approaches.
Value Added Tax is a tax that applies to the provision of most sales of goods or services. It is one of the primary methods used by the government to raise money based on the sale of goods and uses businesses to collect the money and remit it to HM Revenue and Customs on a regular basis.
As most VAT registered companies buy goods and services as well as sell goods and services there is an element of netting off to be completed in each monthly or quarterly return. Hence, the whole process of VAT registration is best avoided unless absolutely necessary.
Having an experienced and skilled service provider register your business and prepare the necessary periodic returns can take a significant headache away from your operation. This is particularly effective if they also provide your bookkeeping or accountancy services since much of the information required will be available through daily transaction processing.
There are complex rules regarding what can be reclaimed on expenditure so having a knowledgeable service provider complete your return can save time and money. HMRC have wide ranging powers and the ability to audit so making sure your records are complete and accurate increases their confidence and reduced your risk of financial censure.