VAT stands for the Value-Added Tax that's charged on most goods and services when it's provider shows a highly profitable business year.
When your business income reaches the minimum HMRC threshold of £85,000 you must register for VAT. This value is then added to the price charged for goods and services provided to business customers (e.g. other shops/services) and non-business customers (e.g. public consumers)
According to HMRC "you'll have to register for VAT if either:
your turnover for the previous 12 months has gone over a specific limit - called the 'VAT threshold.
you think your turnover will soon go over this limit
You can choose to register for VAT if you want, even if you don't have to."
Voluntary registration can be beneficial for businesses dealing with VAT supplies and customers. This way you can charge VAT on your invoices and recover the extra tax paid. .
There are three VAT rates that vary according to the goods or services provided:
standard: 20 %
reduced: 5 %
zero: 0 %
As a Value-Added Tax registered business you are entitled to "charge VAT on the goods and services you provide" and "reclaim the VAT you pay when you buy goods and services for your business"
You can ask HMRC if they can make an exception, and allow you not to register for VAT, by sending them a letter, stating why you are applying for an exception. The letter should provide evidence and explain why the value of your taxable supplies will not go over the threshold.
Using SimpleTax to file your tax return is as simple as replying "Yes" to the question "Is this business registered for VAT?", input values without VAT and we will do all the calculations for you! Straightforward and free!