VAT Registration Levels
Value Added Tax (VAT) is a type of sales tax used in the UK. When a taxable item is sold, a percentage is added to the sales price. The VAT is then forwarded to the taxation authority. If you are a business who sells taxable goods and services in the UK, then you need to register for VAT if you sell over a certain amount.
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Eligibility for Registration
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If you earn income from a business or trade, you can register for VAT. Businesses include individuals, partnerships, companies, clubs, associations and charities. According to Her Majesty's Revenue and Customs (HMRC), an individual or organization that registers for VAT is known as a taxable person.
VAT Threshold
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You must register for VAT once your business's revenue is over £70,000 per year. If you take over another business, add your own VAT from the last 12 months to the revenue from the business you are taking over to determine the threshold. If you are under the threshold you can still register for VAT on a voluntary basis.
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Exemption from Registration
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If you think your business has exceeded the registration threshold temporarily, then you can apply for an exemption. According to the HMRC, in order to qualify for the exemption, you must show that your future turnover will be below the de-registration threshold of £68,000. To apply for the exemption, fill out the VAT form but state that you are applying for an exemption and include your reason.
Distance Sellers
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If you are a business that supplies or delivers goods to the United Kingdom, you may need to register for VAT. For example, if you have an internet business and you deliver to the United Kingdom, you will have to register for VAT if you exceed the distance selling threshold of £70,000 as of September 2010. You will also need to register if you sell and deliver any alcohol or tobacco to the United Kingdom at all.
Who Cannot Register for VAT
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If your business or trade only sells exempt goods or services, then you cannot register for VAT. Exempt goods and services include items like newspapers, physical education, betting and gaming and lottery ticket sales.
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