VAT – whether to register or not?
In days gone past there was a significant delay between your sales income arriving in your bank account and that income being presented to the inland revenue. In which you would be able to apply for VAT registration if necessary.
However, this has all changed with the advent of a system called ‘Connect’ where HMRC gathers information about your business from many different sources. The data this system generates creates an accurate picture (or assumption) of what you are actually earning and whether you can afford your lifestyle based on the profit you are declaring. So all your ‘cards’ – supermarket etc, for example, are collated. Your financial digital footprint is being analysed.
We are letting you know this because it means that HMRC are on the hunt for businesses they believe should be VAT registered. So if you are close to the threshold please keep an eye out for a letter from HMRC. The threshold is £85,000.
Please don’t sit on this or ignore it. You are welcome to show it to us – we won’t have received a copy. They will suggest that you show the letter to your tax adviser and are then required to either register or to tell them why you think you don’t have to. And again, it’s probably best if you involve us in this decision as we’ll be able to advise you.
Please email David@theaccountancypractice.com or ring 01763 257882 to talk to us about this.