HM Revenue and Customs (HMRC) has launched a digital tool to help businesses estimate what registering for VAT may mean for them.
Named the VAT Registration Estimator, it has been developed after feedback from small businesses suggested an online tool would be helpful to show when their turnover could require them to register for VAT and how it would affect their profits.
HMRC said the estimator can help any business to see what registering for VAT could mean, as well as linking to further information about the registration process. It is also a useful tool for businesses operating below the threshold and considering voluntary registration.
Its director general for customer strategy and tax design, Jonathan Athow, said: “We know that the majority of our customers want to get their tax right. We have listened to what businesses have said and the new tool is designed to help them understand VAT registration, including when they might be required to register.
“The VAT Registration Estimator has been developed in partnership with small businesses and trade representatives who tested the online tool and gave feedback before its launch.
“We hope it will support businesses’ understanding of VAT registration, especially when combined with our guidance and other services.”
Registration requirements
A business must register for VAT if: its taxable turnover for the previous 12 months is more than £90,000; it expects its turnover to exceed this level in the next 30 days; or it is an overseas business that supplies goods and services to the UK.
The estimator is free to use. It involves inputting approximate business incomes and costs, using the guidance to choose an appropriate VAT rate, and stating a preference to add VAT or absorb it into a current estimated selling price.
Karen Thomson, Administrative Burdens Advisory Board (ABAB) member, commented: “I volunteered to be a tester for the new VAT tool. I am not a VAT expert so approached the experience as if I were a business with no knowledge of VAT.
“Having made some comments, along with other stakeholders, I have now used the final tool and find it very useful. I like that when you are asked for information there are examples, links to guidance where appropriate and help on completing the boxes.
“A lot of work has gone into this tool, and I believe the stakeholder views have been considered to ensure the customer has the best experience possible.”
