From Monday 15 May 2023, unless you are…
You have to register for VAT when your VAT taxable turnover exceeds the VAT registration threshold in any 12-month rolling period, or if it will exceed the threshold in the next 30 days alone. Please see this HMRC link for more information.
VAT taxable turnover:
This is the total value of everything you sell that isn’t exempt from VAT. To determine the VAT taxable turnover, you need to exclude VAT-exempt sales and goods or services you supply outside of the UK.
What is NOT exempt from VAT (and therefore has to be added to your VAT taxable turnover):
* Goods you hired or loaned to customers
* Business goods used for personal reasons
* Goods you bartered, part-exchanged or gave as gifts
* Services you received from businesses in other countries that you had to ‘reverse charge’
* Building work over £100,000 your business did for itself
* Any zero-rated items
Goods or services you supply outside of the UK:
For this you would need to determine the place of supply, which could be a bit tricky. If you’ve determined that the place of supply is NOT in the UK, then you exclude these sales in calculating your VAT taxable turnover.
The place of supply is the place where a supply is made and where VAT may be charged and paid. The basic rule for goods is that the place of supply is where the goods are located at the time the supply takes place. It is therefore important to look at the terms of trade to establish where the goods are when the supply takes place.
With services, deciding the place of supply can be complicated. The general rule is that if you supply services to a:
* business customer in another EU country, the place of supply is where the customer belongs.
* non-business customer in another EU country, the place of supply is where the supplier belongs.
* customer who is not in the EU, the supply is outside the scope for UK and EU VAT; you therefore don’t have to charge EU VAT or include the sale on your VAT Return.
Please see this HMRC link for more info on place of supply: http://www.hmrc.gov.uk/vat/managing/international/exports/services.htm
If the place of supply of your service is in another EU country:
The supply is outside the scope of UK VAT. However, for some supplies, you may need to register and account for local VAT in the country of supply. You will need to check with the tax authority in that country to find out how to treat the services you are supplying.