If a sole trader is not vat
registered then output value added tax is not added to the sales made and input
value added tax cannot be claimed on purchases.
Quarterly vat returns do not have
to be made and the self employed small business does not have to register with
HM Revenue & Customs for vat purposes.
The vat threshold at which small
businesses must seek a vat registration usually changes in the budget each
March.
In 2006-07 the vat threshold was
£61,000 p.a. for the financial year
starting 6 April 2007 the vat threshold for small businesses was increased to £64,000
p.a. Sole traders with turnover that reaches the vat threshold should register for vat unless this sales turnover has been exceptional and
not likely to be repeated on an ongoing basis.
Sole traders should note the legal
position regarding vat that under the customs rules any business whose sales
exceed the vat threshold, currently £64,000 p.a., are liable to pay vat at 17.5%
on their sales turnover whether they register with HM Revenue & Customs
for vat or not.
Value Added Tax (VAT)
Further guidance is available from
the HM Revenue & Customs website vat portal at:
Use the categories
below to browse HMCE VAT publications which
include introductory guides on key topic areas,
detailed guidance from Public Notices as well as
information sheets and business briefings. If
you cannot see exactly what you are looking for,
try searching for all VAT publications in the
HMCE
Library.
Introduction to VAT This is a summary of
the most common VAT issues and a good place to start
finding out how it affects you and your business.
Managing your VAT Includes guidance on
setting up and keeping VAT records, details of
common errors made, and help if you have payment
problems. Information on Motor Trade issues
is also available.
Registering for VAT Registering for VAT is
compulsory for some companies and voluntary for
others. Find out how your business fits the bill and
how to get registered.
Special Schemes & Options HMCE have a
range of special schemes and options to simplify VAT
for small businesses. See if you qualify for a flat
rate scheme or would prefer to spread your payments
over fixed, monthly instalments.
VAT for Travellers If you are a visitor to
the UK, or spend long periods abroad, there are
special rules and schemes you need to know about.
VAT & International Trade There are import
rules and procedures for dealing with VAT on
international trade. See this section for relevant
material.
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