Fast response to — when should you register your business for VAT?

You should register your business for VAT when your taxable turnover exceeds the VAT threshold set by the government. Registration is required within 30 days of reaching or expecting to reach the threshold.

When should you register your business for VAT

Detailed answer question

In determining when to register a business for Value Added Tax (VAT), it is crucial to consider the applicable threshold set by the government. VAT registration becomes mandatory when a business’s taxable turnover exceeds this threshold. Failure to register within 30 days of surpassing or expecting to exceed this threshold can lead to penalties and fines. Let us delve into this topic further, exploring a quote, interesting facts, and a table to enhance our understanding.


“Every sale has five basic obstacles: no need, no money, no hurry, no desire, no trust.” – Zig Ziglar

Interesting Facts:

  1. VAT is a consumption tax placed on goods and services and is widely implemented across the world by over 160 countries.
  2. VAT was first introduced by France and Germany in the 1950s as a simplified method of taxing goods and services.
  3. The VAT threshold varies between countries and even within countries, depending on specific regulations and requirements.
  4. VAT registration involves obtaining a unique identification number, often referred to as a VAT number, which is used for legal and administrative purposes.
  5. VAT-registered businesses can claim back the VAT they’ve paid on their business-related purchases, thus reducing their overall tax burden.

Table – International VAT Thresholds in Selected Countries:

Country Annual VAT Threshold (USD) Monthly VAT Threshold (USD)
United Kingdom $108,250 $9,020
Germany $11,788 $982
France $43,801 $3,650
United States N/A N/A
Canada N/A N/A
Australia $61,313 $5,109

Please note that the thresholds mentioned in the table are approximate figures and are subject to change based on the respective country’s regulations.

By understanding the applicable VAT threshold and ensuring timely registration, businesses can comply with the legal requirement while also capitalizing on potential benefits. Remember, as Zig Ziglar emphasized, building trust and cultivating a desire for your products or services are vital steps in overcoming the obstacles that may hinder sales success.

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A video response to “When should you register your business for VAT?”

In this video about VAT registration, the business accountant provides guidelines to determine if it is necessary for a business. In the UK, most businesses have a threshold of £85,000 in sales per year, and if they exceed this limit, they must register for VAT. However, there are exemptions and specific circumstances where not all sales are counted towards the threshold. If a business is below the threshold, registration is voluntary. The accountant discusses the paperwork issues involved in registering for VAT and the financial implications, such as the ability to recover VAT on purchases but also the need to charge VAT on sales. He gives an example of a haircut to illustrate the impact on pricing. The accountant advises seeking professional advice before making a decision regarding VAT registration, as each situation is unique.

Other responses to your inquiry

You must register if, by the end of any month, your total VAT taxable turnover for the last 12 months was over £85,000. You have to register within 30 days of the end of the month when you went over the threshold. Your effective date of registration is the first day of the second month after you go over the threshold.

What you need to know

  • It is mandatory for any business to register for VAT if the income earned in any consecutive twelve month period exceeded or is likely to exceed R1 million​.
  • Any business may choose to register voluntarily if the income earned, in the past twelve month period, exceeded R50 000.

More intriguing questions on the topic

How do you know if you should be VAT registered?
The response is: A business must register for VAT if its taxable turnover for any consecutive 12-month period exceeds the VAT registration threshold. Another common reason why a business may be forced to register for VAT is if it takes over an existing business that is VAT-registered.
How does a US company get a VAT number?
Answer: The U.S. does not have a VAT system, but when required companies may register and report VAT in the EU, UK, Australia and parts of Asia. VAT numbers are approved by tax authorities when your company has business activities in their country that legally require VAT reporting.
How can I avoid VAT registration?
If you’re no longer eligible to be VAT registered, it is possible to cancel your registration. This could occur if you stop trading or making VAT taxable supplies or if you join a VAT group. You can also request HMRC cancel your registration if your VAT taxable turnover falls below £83,000.
What are the disadvantages of being VAT registered?
Disadvantages of Being VAT Registered
It may be confusing if you are unsure of the requirements, and you may need some assistance with VAT registration. In addition, you will have to charge your customers more, and they may be able to find a cheaper alternative if one of your competitors does not charge VAT.
When do I need to register for VAT?
As an answer to this: You must register for VAT if the taxable turnover of your business has reached £85,000 (currently the VAT threshold) or more over the past 12 months, or it’s likely to do so in the coming year. Failing to register for VAT online or using a VAT1 form when your turnover grows beyond £85,000 could result in a hefty fine from HMRC.
Does my business qualify for VAT filing?
If you find your business qualifies for VAT filing, you must register before doing business in the country or collecting and paying VAT. There are several options in the EU for simplified VAT registrations and reporting for non-EU B2C sellers, including One-Stop Shop and Import One-Stop Shop.
What is the VAT registration threshold for sole traders?
The response is: The VAT registration threshold for the sole traders is also £85,000. If your annual turnover exceeds this amount, you are legally bound to register for VAT. In case you currently haven’t exceeded the limit but know that your turnover will go above £85,000 in the next 30 days, you must still register for VAT.
Can a business opt out of VAT registration?
Answer: The VAT registration threshold compels businesses to register for VAT, but there isn’t a compulsory VAT deregistration threshold in place that compels businesses to opt out of it. You can, however, ask HMRC to cancel your registration if your VAT-taxable turnover falls below the deregistration threshold of £83,000.
When do I need to register for VAT?
The reply will be: You must register for VAT if the taxable turnover of your business has reached £85,000 (currently the VAT threshold) or more over the past 12 months, or it’s likely to do so in the coming year. Failing to register for VAT online or using a VAT1 form when your turnover grows beyond £85,000 could result in a hefty fine from HMRC.
Can a business register for VAT online?
If VAT registration is on the cards for your business, you can register for VAT online. And once your business is VAT registered, you’ll need to follow the Making Tax Digital rules and use MTD compatible VAT software to submit your VAT Returns.
When should I show VAT on my invoices?
Response: Do not show VAT as a separate item on any invoices you issue until you’ve received your registration number. You can explain to your VAT-registered customers that you’ll be sending them VAT invoices later. Once you’ve got your registration number, you should send them the necessary invoices showing VAT within 30 days.
What happens if I don't register for VAT in the UK?
Answer will be: If you do not register for VAT in the UK when you’re required to, HMRC may register you without your agreement. We may also charge you a penalty if you fail to tell HMRC at the correct time that you should’ve registered for VAT. You can find more information about registration and the relevant time limits in section 4 and section 5.

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