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Businesses must register for VAT if their VAT taxable turnover goes over the threshold, which is currently £85,000. However, you can also register voluntarily.
There is a time limit if you wanted to reclaim VAT paid before registering:
- You can reclaim VAT on purchases made up to 4 years before registering
- Reclaiming VAT on services is up to 6 months before registration
You are only able to reclaim VAT on goods bought specifically for business use and they must still be owned, used or in stock.
In addition to this, you must also provide proof of cost and date of purchase as well as evidence that the purchases remain relevant to your business.
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Knowing how to take control of your business finances to maximise profits can be difficult, especially with the current climate. Knowing the common mistakes to avoid can be difficult and can leave you feeling unsure.
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