Debitoor Dictionary

Accounting terms explained in a simple way

VAT Registration - What is VAT registration?

VAT registration is the process of listing your business with the government as active in production and sales. Once you are VAT registered, you will become eligible for the return of VAT.

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After VAT registration, you will be responsible for:

  • Charging VAT when you sell goods or services (and charging the right amount!)
  • Paying any VAT due to HMRC
  • Submitting quarterly VAT Returns
  • Keeping VAT records and a VAT account.

Do I need to register for VAT?

If you have a ‘taxable turnover’ of more than £85,000, you need to register for VAT through HMRC. Most businesses can register online.

Many small businesses and start-ups have a turnover under the £85,000 threshold but still choose to register for VAT. There are pros and cons of voluntary VAT registration, and the decision to opt-in volutarily very much comes down to your particular business, as well as your own personal preferences.

The advantages of voluntary VAT registration for entrepreneurs and small businesses include:

  • You can reclaim some of the VAT on the goods and services purchased by your business
  • As your business grows, you may reach a turnover of £85,000. If you preemptively register for VAT before reaching this threshold, you could save the time and hassle of adjusting your prices to include VAT rates.

Some of the disadvantages of voluntary VAT registration for entrepreneurs and small businesses might be:

  • When you start charging VAT, it’s common practice to include the tax in your prices. Your products or services will therefore appear more expensive for the end user.
  • Once you are registered for VAT, you will need to file VAT Returns, keep VAT incoices and receipts, and maintain VAT accounting records. This all adds to the workload and results in more paperwork - but with account software like Debitoor, this is now quick, easy and hassle-free.

VAT Registration and Debitoor

With Debitoor invoicing software, you can choose whether to activate VAT, depending on whether your business is VAT registered.

By activating VAT registration in your account settings, you can add VAT to your invoices, fill in your tax reports, and adjust VAT rates for different products, services and contacts. If you’re not yet registered for VAT, simply disable this feature in your account settings, and continue with business as usual!