VAT registration

[PipeeC]

My partner and I run a small dog walking business and our turnover last year was £88k. We are being told by our book keeper that we should register for VAT even though we haven’t reached the threshold of £90k. Getting conflicting advice. We won’t be going over the threshold next tax year as we are running down the business. Any advice appreciated, thanks

 

[DWS]

When did your turnover reach £88k? this is on a rolling 12 month period not a tax year or accounting period.
The VAT registration threshold was only raised to £90k in April, before that it was £85k so if you did reach £88k before April then your bookkeeper is correct and you need to register, although if you do not expect to stay above the threshold then you can apply for a VAT ‘exception’

 

[PipeeC]

When did your turnover reach £88k? this is on a rolling 12 month period not a tax year or accounting period.
The VAT registration threshold was only raised to £90k in April, before that it was £85k so if you did reach £88k before April then your bookkeeper is correct and you need to register, although if you do not expect to stay above the threshold then you can apply for a VAT ‘exception’

We reached £88k after April

 

[Socio South West]

If your strategy is definitely to run the business down, then my view - totally from the practical angle - would be not to register for VAT.

I suggest you flag the situation with your accountant when your books next go in and go with their advice: Hopefully you have a practical and imaginative accountant who will help you avoid registration if you don't need to, or handle an application for an exception for you.

 

[DWS]

We reached £88k after April

In which case you were below the £90k threshold and no need to register
Maybe worth asking your bookkeeper the reasoning behind them telling you that you have to register.

 

[MyAccountantOnline]

My partner and I run a small dog walking business and our turnover last year was £88k. We are being told by our book keeper that we should register for VAT even though we haven’t reached the threshold of £90k. .....

I'm with DWS on this one - I too would ask why your bookkkeeper is suggesting you register for VAT.

Have you discussed it with your accountant?

If you are dealing with non-VAT registered individuals you instantly become 20% more expensive or have to reduce your profit to allow for the VAT you charge if you are VAT registered.

 

[PipeeC]

Thanks everyone for your advice. The book keeper is saying we should register for VAT based on the predicted increased turnover from previous years but as I said, we plan to not take on any more clients. Their other reason is that HMRC will insist we are VAT registered as we are so close to the threshold.

 

[David Griffiths]

The bookkeeper is plain wrong. The requirement to register for VAT is based only on past turnover and you would not have to register just because you think that your future turnover would take you over the threshold. There is one exception to this - you have to register if you expect your turnover to exceed the £90k threshold in the next 30 days alone,i.e. you average £3000 of sales over each of 30 days. It does NOT mean that if you have reached a level of say £85k and expect to do another £5k you register now - you simply wait until you get there.

Saying that HMRC would expect you to register just because you are close to the theshold is frankly bonkers. What is the point of having a set level if you have to register because you nearly get there?