VAT stands for Value Added Tax - a tax on consumer expenditure. It is collected on business transactions, imports and acquisitions. Most business transactions involve supplies of goods or services. VAT is payable if they are:
What are the VAT rates?
There are 3 rates of VAT:
You can find details of which goods and services may be zero/reduced rated or exempt in Notice 700: The VAT guide and Notice 701/39: VAT Liability Law. It also tells you where you can find additional information if you are unsure about the liability of a particular supply.
Do you need to register for VAT?
You only need to register for VAT if:
Please note that you may be charged a penalty if you register late.
If the value of your taxable supplies is over the Registration Threshold, you need to register for VAT, unless your supplies are wholly or mainly zero rated in which case you may apply for exemption from registration. The limits are shown in the supplement to Notice 700/1: Should I be registered for VAT?
If your taxable supplies, distance sales, or acquisitions are not expected to exceed the Registration Threshold in the next 30 days, and have not exceeded the Registration Threshold in the past 12 months VAT registration is not necessary in these circumstances although businesses can register for VAT on a voluntary basis to be able to reclaim VAT on purchases. Anyone who registers will also have to account for tax on their sales, where appropriate.
Keeping VAT Records:
Please note that VAT authorities require actual proof of business in the
Once you are registered for VAT you need to charge VAT at the correct rate on all your sales. Later on you can claim back VAT on all your business expenses providing you have a proper VAT receipt. HM Customs and Excise can inspect the businesses and check the records on the VAT you have claimed or paid therefore the paperwork must be kept in order. Omega Group provides assistance with keeping VAT Records, completing VAT return form which is sent to your registered business address by HM Customs and Excise each quarter. Our specially trained staff can help you with the paperwork and can act on your behalf.