Q. The turnover of my business has been no higher than £75,000 over a 12-month period since we started but has now crept up to £92,000. It reached this point on 5 December 2023. What do I need to do about VAT registration?
A: Once your total VAT taxable turnover for the last 12 months goes above the threshold (£85,000), you must register for VAT with HMRC. Although you can voluntarily register for VAT if you’re below this amount, it doesn’t sound as if your business has taken that approach previously.
But now your turnover is at £92,000, you need to register with HMRC within 30 days of the end of the month that you went over the threshold. According to HMRC: “Your effective date of registration is the first day of the second month after you go over the threshold.”
So, in your case, it means you will need to have registered by 31 January 2024 and your effective registration date will be 1 February 2024.
For any business which realises it’s going to go over the £85,000 mark in the next 30 days, you have to register by the end of that period. So, in that example, say your company (previously not VAT-registered) brings in a new £150,000 deal on 1 January, with payment coming to you within that same month. You would have to register by 30 January.
Lastly, just to clarify what HMRC defines as turnover. It says this is “the total value of everything you sell that is not exempt from VAT.”