VAT threshold reached what date do calculate from

[sparksy68]

Hi everyone I'm asking this for our friend who is in a Pickle over VAT. This July our friend ( sole trader) reached the vat threshold with her buisness. She has not charged VAT on any invoices up to this point. She has registered now for VAT ( which HMRC is dragging its feet with may be 40 days)
The main question is what date is her business liable to pay VAT?
Is it after the threshold date
Or is it for the whole year even though she hasn't charged her customers any. Many thanks for any help you can give..

 

[DWS]

If the registration was filled out correctly with the date of when your friend breached the threshold then HMRC would have said what the effective date was.
If the threshold was breached in July then the Effective Date Registration should be the 1st September
Please bear in mind that the threshold is based on a rolling 12 month period not on an accounting year.

 

[WaveJumper]

Register for VAT

How to register for VAT, change your details, cancel your registration, register for VAT in EU countries.

www.gov.uk

 

[MyAccountantOnline]

Hi everyone I'm asking this for our friend who is in a Pickle over VAT. This July our friend ( sole trader) reached the vat threshold with her buisness. She has not charged VAT on any invoices up to this point. She has registered now for VAT ( which HMRC is dragging its feet with may be 40 days)
The main question is what date is her business liable to pay VAT?
Is it after the threshold date
Or is it for the whole year even though she hasn't charged her customers any. Many thanks for any help you can give..

If your friends turnover exceeded the VAT threshold for the first time in July she should have registered for VAT by 30 August and started charging (and being able to recover) VAT from 1 September.

Your friend had 30 days to register for VAT from the end of the month in which she went over the VAT threshold.

What date did she register for VAT and what date did her VAT registration commence?

 

[HFE Signs]

If they went over the threshold in July, is that a 4 month accounting period (April to July) to reach the limit?

 

[MyAccountantOnline]

If they went over the threshold in July, is that a 4 month accounting period (April to July) to reach the limit?

No - when you look at turnover for VAT registration purposes an accounting period isn't relevant. It's done on a rolling 12 month basis. It confuses a lot of people.

 

[HFE Signs]

No - when you look at turnover for VAT registration purposes an accounting period isn't relevant. It's done on a rolling 12 month basis. It confuses a lot of people.

I understand that, I was just trying to understand if it was obvious with the uplift in turnover

 

[MyAccountantOnline]

I understand that, I was just trying to understand if it was obvious with the uplift in turnover

Why April to July?

 

[HFE Signs]

Why April to July?

Because if it was just a 4 month period then it would be obvious that the 12 months would exceed the threshold by far. Generally as the business grows and the turnover goes up, you should be able to predict the point in which vat registration is required

 

[MyAccountantOnline]

Because if it was just a 4 month period then it would be obvious that the 12 months would exceed the threshold by far. Generally as the business grows and the turnover goes up, you should be able to predict the point in which vat registration is required

You are assuming the OP prepares annual accounts to 5 April which may or may not be the case.

Anyone who keeps good accurate records should be able to see they are approaching the VAT threshold but it's so important to look at it on a rolling 12 month basis and disregard any accounting period.

 

[HFE Signs]

You are assuming the OP prepares annual accounts to 5 April which may or may not be the case.

Anyone who keeps good accurate records should be able to see they are approaching the VAT threshold but it's so important to look at it on a rolling 12 month basis and disregard any accounting period.

I'm not assuming, it was a question

 

[MyAccountantOnline]

I'm not assuming, it was a question

Did the OP say accounts were prepared to 5 April?

 

[HFE Signs]

Did the OP say accounts were prepared to 5 April?

As you pointed out, often people think its within their accounting period, this was why I asked. My question seems to have upset you?

 

[MyAccountantOnline]

As you pointed out, often people think its within their accounting period, this was why I asked. My question seems to have upset you?

No it really hasn't upset me

I was actually starting to wonder if I'd missed the OP mentioning a 5 April year end.

It really isn't relevant what turnover was for the 4 months to July though - take it from an accountant

 

[HFE Signs]

No it really hasn't upset me

I was actually starting to wonder if I'd missed the OP mentioning a 5 April year end.

It really isn't relevant what turnover was for the 4 months to July though - take it from an accountant

I know that I'll put it another way to help you understand - If the monthly turnover is increasing, then it should be quite predictable and easy to forecast the point in which vat registration is required, regardless of where you are in your accounting cycle.

 

[MyAccountantOnline]

..... If the monthly turnover is increasing, then it should be quite predictable and easy to forecast the point in which vat registration is required, regardless of where you are in your accounting cycle.

Indeed

 

[sparksy68]

Many thanks for all the replies so far.. so to clarify a few points.. she hit threshold in July I think
Spoke to accountant who sai register for VAT so August should have been the month.
Accountant came back with a VAT bill for 12K ? ( 12.5 flat rate) So I presume she's calculated the whole years takings even though no VAT has been added to invoices until she registered.

So does this sound correct ?
Do you have to pay VAT on the whole years takings just because you have gone over threshold ?

 

[DWS]

If threshold was breached in July then VAT needs to be charged from 1st September only

 

[DontAsk]

Do you have to pay VAT on the whole years takings just because you have gone over threshold ?

No. If the accountant has done that then it's time to get a new accountant.

You charge VAT from the effective date of registration. Through your VAT return you offset the VAT you pay for supplies, etc.

You can also claim for the VAT you have paid on stock that you still hold at the date of registration.

The accountant should be explaining all this. If not then, again, get a new accountant.

 

[MyAccountantOnline]

Many thanks for all the replies so far.. so to clarify a few points.. she hit threshold in July I think
Spoke to accountant who sai register for VAT so August should have been the month.
Accountant came back with a VAT bill for 12K ? ( 12.5 flat rate) So I presume she's calculated the whole years takings even though no VAT has been added to invoices until she registered.

So does this sound correct ?
Do you have to pay VAT on the whole years takings just because you have gone over threshold ?

Your friend would have to charge and could recover VAT from 1 September.

If he/she is concerned they really should speak with their accountant.

The accountant should also send your friend schedules showing how the figure is calculated.

It's something accountants acting for small business clients will deal with routinely and I'd be surprised if it's incorrect assuming it's a reputable accountant.

 

[sparksy68]

No. If the accountant has done that then it's time to get a new accountant.

You charge VAT from the effective date of registration. Through your VAT return you offset the VAT you pay for supplies, etc.

You can also claim for the VAT you have paid on stock that you still hold at the date of registration.

The accountant should be explaining all this. If not then, again, get a new accountant.

So this my thinking, if you haven't charged any VAT on invoices, didn't register until September then you shouldn't have all of the previous invoices taken into account..

I personally used this accountant once only for annual corporate tax and they forgot it was a leap year so HMRC were on my case because of a missing day in February so I haven't got much faith in them tbh

 

[MyAccountantOnline]

So this my thinking, if you haven't charged any VAT on invoices, didn't register until September then you shouldn't have all of the previous invoices taken into account..

I personally used this accountant once only for annual corporate tax and they forgot it was a leap year so HMRC were on my case because of a missing day in February so I haven't got much faith in them tbh

If your friend was correctly registered for VAT from 1 September they dont have to pay output VAT on any sales prior to that.

 

[WaveJumper]

A fine example of picking the right accountant especially when a "friend" has already had a bad experience with said person