Q:
Hello. I have just set up my own ltd company. I will be doing consultancy work through the company. Separately I will be doing some contracting working directly for companies as an employee.
Two questions:
I dont expect to exceed the VAT threshold and therefore dont intent to register for VAT (other than printer ink, and the odd client lunch I dont have much reclaimable VAT). If I do approach the threshold do I simply start to charge VAT or do I have to go back to clients and try to charge the missing VAT amount?
Do the earnings I get from being an employed contractor count towards the VAT threshold amount? In these roles I will simply be a PAYE employee of another company for a few months (a company completely independent and unconnected to my own).
Thanks
A:
Well that’s a lot of questions which would take me about a week to answer! Thankfully HMRC have written a useful leaflet called “Should I be registered for VAT” which is on their website here http://tinyurl.com/396kxa which deals with all of these practical issues, including when to register for VAT and when to start charging VAT.
I’d recommend sitting down with a cup of coffee when you have half an hour to spare to read through the leaflet – it’s not particularly long and is written with the layman, rather than the VAT expert or accountnat, in mind.
One point I would make though is that you mustn’t ever charge VAT unless you’re registered for VAT – to do so is an offence and you have to pay it to HMRC even if your customer doesn’t pay! Section 4 of the leaflet explains in detail how and when to start charging VAT.
This should give you the information you need but let us know if you’re still confused about anything in particular.
Marie