Businesses have to register with HMRC for VAT once their company’s annual turnover exceeds the threshold set for the current tax year. The threshold for VAT changes every year and will usually be announced as part of the budget. If you think your company’s turnover is likely to go over the set thresholder during the next 30 days, you must register your company for VAT. Also, if you buy a business which is already VAT registered, registering for VAT is also mandatory.
Failing To Register With HMRC For VAT
If you do not let HMRC know that you are required to register your business for VAT, you may have to pay a penalty. The amount will depend on how much VAT your business owes and how late you register for VAT. You will still need to pay VAT from the day on which you should have registered. Even if you did not charge VAT on services and goods you provided from that specific date, you may still pay any VAT which you should have charged. On top of that, you may also be charged with a penalty of failure to notify as well as a penalty for civil evasion in certain cases.
How Much Is The Penalty?
The rate depends on your lateness for registering for VAT. If you are 9 months late or less, your business will be charged at 5%. If you are between 9 – 18 months late, the penalty will stand at 10% while if registration occurs more than 18 months late, the penalty is 15%. In any case the minimum penalty of £50 will apply. Should you be penalised for your late VAT registration you will be notified in writing by HMRC and you will also be given instructions about how you can make an appeal.
If you need help with VAT Registration and VAT compliance and refunds please contact The Accountancy Solutions on 01216297768 or 02070784001 for further advice.