VAT, or Value Added Tax, is a tax charged by businesses on goods or services sold to their customer. Businesses with an annual turnover of more than £85,000 (as of 2021) are legally required to register for VAT, but for businesses below this turnover threshold, VAT registration is optional. Even in cases where VAT registration is not mandatory, many business owners still choose to register their business for VAT, since it can sometimes provide additional benefits to the business.
Since VAT can be a tricky topic for business owners, Heelan Associates have created a useful video guide explaining how VAT works and what it means for your business. If you’re short on time, here are the key points covered in the video:
- Some goods and services are ‘VAT exempt’, which means you cannot charge VAT on them.
- If your business is selling to other VAT-registered businesses and not directly to the consumer, then you might benefit from becoming VAT-registered.
- Business owners are legally required to keep a digital copy of their VAT records.
- If you’ve charged your customers less VAT than you’ve paid on your purchases, HMRC will refund you the difference.
Check out the video below for more information on VAT for businesses.
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