Are you monitoring your turnover on a regular basis for the purposes of VAT?

For those smaller businesses, the business must register for VAT where the turnover, on a rolling 12-month basis, exceeds £90,000. The threshold for deregistration is £88,000. HMRC estimate that 28,000 businesses will no longer have to be VAT-registered. However, please be aware there are situations where it might still be beneficial to remain registered – especially if your customers are businesses. For those on the VAT Flat rate scheme, this is open to businesses where turnover is expected to be £150,000 or less (excluding VAT) in the next 12 months. Businesses have to leave the scheme if you expect your total income in the next 30 days alone to be more than £230,000 including VAT, or on the anniversary of joining the scheme, your turnover in the last 12 months was more than £230,000 (including VAT) – or you expect it to be in the next 12 months. Will the VAT flat rate scheme be of benefit? It depends…… the numbers need to be “crunched” to ascertain this.  An example – two completely similar businesses – both paying rent for their premises of £12,000 p.a.  except one does not pay VAT on the rent and other one does – an additional £2,400 of VAT suffered. This may influence the decision as to whether it is beneficial to use flat rate or standard method. Come and talk to us about these aspects of VAT. We can also help you monitor your turnover figures to ensure you do not fall foul of these limits.