This blog is based on points from the Chancellor’s 2017 Budget.
The VAT registration threshold is £85,000 per annum and will be for the next two years. Once again, the Government is kicking all the possible changes into touch until the proposed date of leaving the EU.
Thus, if your turnover in any twelve month period, including recharged expenses, exceeds £85,000 you will normally become liable to register for VAT. Registration for VAT means that you have to charge VAT on all work done and on all expenses charged by you to your clients, unless the clients are located outside the UK, in which case there is normally no need to charge VAT. However, if you are a Hotel or a Restaurant, or an Architect or Building Contractor, you would normally have to charge VAT even to your foreign customers.
Action Point:
VAT is unfortunately a very complicated tax and there are lots of exceptions. We have seen in our own experience that business owners have been so much afraid of the consequences of VAT registration that they have deliberately turned away work in order to remain below the turnover threshold.
We would not suggest that you take such action because behind every problem there lies an opportunity. If you would like to expand your business but are afraid of the VAT registration consequences, or just want a general chat about the rules, please get in touch with us and we will do our best to offer constructive help.
Please obtain specific advice from ourselves if in doubt. No responsibility is taken for any act or omission on your part on reading this without further advice.
– By Stephen Handley, FCCA