January is a busy time for both the tax man and those who are in self-employment, due to the online submission deadline for tax returns – however, this January also sees a warning being issued to businesses that may be approaching the VAT threshold; if this is you, you should apply for your VAT registration as soon as possible.
As the tax laws currently stand, if you’re a self-employed sole trader or small business, once you reach a turnover of £73,000 or more you must register for VAT with HMRC. Last year, sole traders who were already VAT registered were given until 31 December to settle their bill – this came hand-in-hand with a reminder from HMRC that all businesses that have reached the turnover threshold for VAT must take responsibility for their VAT registration.
VAT Registration – Don’t Put It Off!
In an attempt to offer fair notice to these sole traders, HMRC contacted approximately 40,000 businesses last summer by sending them a letter to remind them that they were nearing the VAT threshold – of the 40,000 businesses who had been identified and contacted for having a turnover between £50,000 and £70,000, the response rate was less than one in every thousand. Unfortunately, this has led to a clampdown by HMRC, who has now decided to put pressure on any business that is approaching the VAT threshold but has not yet registered for VAT.
If your business is approaching the VAT threshold but you’ve not yet become VAT registered, please take this as a warning that you must take action now. With businesses being targeted throughout January, if you’re investigated and found to have exceeded the £73,000 threshold but haven’t yet completed your VAT registration, you may be given a severe penalty in the shape of a fine, as well as being at risk from prosecution.
Our Accountants Can Help!
So if you don’t want to feel the pressure of HMRC breathing down your neck, and you’re approaching or have already exceeded the VAT threshold, it’s absolutely vital that you contact them and arrange registration straight away. With the tax man getting serious about non-payment and VAT registration, you really can’t afford to take the risk. If you’re not sure what you need to do or you need any advice regarding VAT registration, the VAT threshold or any other tax matters at all, feel free to get in touch with our accountants at Blue Skies and we’ll do everything we can to help.