We’ve all come across VAT in some form or another. When you have a company it becomes more relevant and it is something you MUST be aware of. If not, being caught out by HMRC can be very costly and fatal to your business.
The current VAT threshold is a sales turnover of £85,000 in any 12 month period; once this is reached you HAVE to be registered for VAT. Before reaching this threshold, it is voluntary to be VAT registered. You can claim the VAT back that has been added to the company invoices your company has paid if you’re registered but you do then have to charge it to all of your customers and you will be billed by HMRC for this extra amount.
Once VAT registered, you have to charge your customers 20% VAT but you are able to reclaim the VAT on purchases for your business. There are several VAT accounting schemes that you could benefit from. Your accountant will help you manage VAT and advise you appropriately.
