VAT Returns and Making Tax Digital

When you have to register

You must register for VAT once your VAT-taxable turnover passes the registration threshold, currently £90,000, measured on a rolling twelve-month basis rather than by your accounting year. That rolling test is what catches businesses out, so it is worth watching as you approach it rather than discovering it afterwards. You can also register voluntarily below the threshold, which sometimes makes sense if your customers are VAT-registered or you carry significant input VAT.

Choosing the right scheme

• Standard accounting: reclaim VAT on what you buy, account for VAT on what you sell
• Flat rate scheme: a fixed percentage of turnover, simpler but not always cheaper
• Cash accounting: account for VAT when you are actually paid, which helps if customers are slow
• Annual accounting: one return a year with instalments, useful for steady, predictable businesses

The right choice depends on your margins, your customers and how quickly you get paid. We will run the comparison rather than guess.

Making Tax Digital

VAT-registered businesses must keep digital records and file through compatible software. We use Xero for this, and can set it up and run it for you, or work alongside the system you already have. Returns are generally due one month and seven days after the end of each quarter, and late submissions now accumulate penalty points that turn into fines.