AMS is a Swindon-based accountancy practice, specialising in supporting SMEs and contractors. In this column, Peter Bromiley, partner at AMS, discusses what to do if you’re over your VAT threshold.
You should talk to an accountant urgently! If at any point during a 12 month period, (good to review this monthly) your turnover exceeds the VAT threshold of £85,000, you must register within 30 days from the end of the month in which you went over the limit.
If the above describes your situation you should register now, and note, you will owe VAT on all sales made from the date you should have registered. Your customers may accept amended invoices charging them VAT, and pay you the VAT you should have charged them. If they don’t, or your customers are in retail, it could cost you 1/5 of your sales backdated to when you should have registered.
When you do register you will also be able to claim back VAT on your business purchases and expenses from the registration date – and possibly up to four years earlier on some items.
Peter Bromiley ACA AMS Accountancy Ltd
Do you have a burning accountancy question? Ask AMS. Visit: www.ask-ams.co.uk and follow them on Twitter:@AMSAccountancy