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VAT - What do I need to Know? (2004-08-12)

1. Q: WHEN SHOULD I REGISTER?
   A: To determine whether you should be registered for VAT you should keep a running total of the previous 12 months sales figures. Start at Month 1 through to Month 12 and then knock of first month and add on next month to get running total. If unsure ask for advice.
   
   It is important that you monitor this carefully
   
   If this total exceeds the Registration limit, currently £58,000(from 10/4/04) or looks as if it will exceed the limit in the next 30 days YOU WILL NEED TO BE REGISTERED.
   
   DO NOT GET CAUGHT OUT the limit can soon be reached, it is only equivalent to £4,800 of sales per month and there are penalties for late registration.
2. Q: HOW DO I REGISTER?
   A: You will need to complete a VAT1 Form and send to the appropriate VAT office depending on your postcode. The office relevant to you can be found on the HMCE website see below
3. Q: WHAT DO I DO WHEN I AM REGISTERED?
   A: You will need to charge VAT on all your sales at the rate of 17.5%
   
   You will be able to reclaim any VAT you pay on your business purchases. Please note you cannot reclaim VAT on personal items of expenditure paid through the business – Drawings.
   
   BUT BEWARE there are special rules for what you can reclaim on Motor Expenses, lease payments on cars, entertaining, gifts
   
   You will need to complete a quarterly VAT return based on either, your Sales and Purchases for the period or on your Receipts and Payments for the period. Which is the most beneficial for you will depend on your circumstances, if in doubt ask for help.
4. BOOKLETS PRODUCED BY CUSTOMS AND EXCISE
   There are many booklets applicable to individual circumstances but the following are applicable to all:
   • Should I be registered for VAT? Notice 700/1
   • The VAT Guide Notice 700
   • Filling in your Vat Return Notice 700/12
   • Keeping Records and Accounts Notice 700/21

   All the above publications are available from the HM Customs and Excise Website www.hmce.gov.uk. REMEMBER IT IS BETTER TO GET IT RIGHT FROM THE START. IF IN DOUBT, ASK FOR ADVICE IT CAN BE COSTLY IF YOU GET IT WRONG !