HMRC has gone live with a new digital tool which estimates what registering for VAT might mean for a business.
A business must VAT register if its turnover exceeds £90,000 in any 12 month rolling period. However, a business may register for VAT if its taxable turnover is less than £90,000, this is known as voluntary registration.
This new tool can be used to estimate what VAT might be owed or reclaimed by a business when it registers for VAT. It can also be used multiple times to compare different situations that could apply to a business in the future.
As usual for VAT, there are penalties for failure to VAT register, or registering late. Not only must a business pay the VAT due from when it should have registered, it will receive a penalty depending on how much it owes and how late the registration is. The rates based on the VAT due are:
- up to 9 months late – 5%
- between 9 and 18 months – 10%
- over 18 months = 15%.