Extremely late VAT registration - Urgent help!

[ash213]

Guys, i need some help.
I am currently in the process of working out my first ever tax bill. I am a sole trader selling online.
As I do not really keep up to date records I worked out when i was sorting out my finances that I turned over £101k during 10/11 financial year.
The taxable profit on this is £25k
I now realize i should have been registered for VAT a long time ago. Sorry for being so stupid about this, i hope the HMRC do not kick me too much!

Anyways a few questions,
1- should I register now?
2 - what do i say to HMRC about not registering earlier?
3 - how much VAT will i have to pay? i have been told by an accountant that i pay VAT on the amount that is turned over past the 78k threshold? so 32k minus the VAT i deduct for outgoings...is this correct?

Please could some one clarify as i want to tie up my financial business this weekend.

cheers all

[les35]

1. you should register as soon as possible.
2. compulsory registration is from the first day of the second month after you exceeded the £73,000 threshold (www.hmrc.gov.uk/vat/start/register/when-to-register.htm). You will not therefore need to register from the start of your business.
3. Thus, only the sales you made from that date will attract VAT.
4. Do consider whether you can recover VAT from customers. This is easier if your sales are B2B.
5. You can recover VAT on expenses, subject to holding proper invoices.
6. You can also reclaim VAT on expenses incurred prior to the date of registration, subject to certain restrictions. (www.hmrc.gov.uk/vat/start/register/purchases-before.htm)
7. Finally; have someone act on your behalf.

[section 44]

The VAT registration application (form VAT1) will provide HMRC with the relevant information regarding when you should have registered.

What does the business do (i.e. are you clear that it is subject to VAT)?

Do your contracts enable you to charge VAT retrospectively (once you have been issued with a VAT number) for work doen after you were required to be registerd for VAT? If not then clearly there is going to be a cost to you.

[ash213]

1. you should register as soon as possible. I will register this weekend
2. compulsory registration is from the first day of the second month after you exceeded the £73,000 threshold (www.hmrc.gov.uk/vat/start/register/when-to-register.htm). You will not therefore need to register from the start of your business. I dont understand, as I am late, how does this work with regards to 2010/11?
3. Thus, only the sales you made from that date will attract VAT. As Above
4. Do consider whether you can recover VAT from customers. This is easier if your sales are B2B. eBay sales, what do you suggest?
5. You can recover VAT on expenses, subject to holding proper invoices. I have all official invoices for my expenses from suppliers, so i can deduct 20% of this from my outgoing VAT?
6. You can also reclaim VAT on expenses incurred prior to the date of registration, subject to certain restrictions. (www.hmrc.gov.uk/vat/start/register/purchases-before.htm) Like What? This is complicated as i'm late , right?
7. Finally; have someone act on your behalf. I would prefer to do it all myself, then in the end get some one to check it over

Thank you please check BOLD above, cheers

section 44 I am an eBay trader if this helps.

[les35]

2. for VAT purposes, ignore the 2010/11 year. Your financial year is irrelevant as far as VAT is concerned. The conventional method of checking sales is simply to add up the monthly sales totals, until you exceed £73,000. If this falls on, for example, 10 May 2011, you are required to register for VAT on 1 July, and charge VAT from that date onwards.
4. selling on ebay raises a number of questions. You will mainly sell B2C, so you can't recover VAT from customers on sales already made.
If you are selling second hand goods, then you will only pay VAT on the profit margin achieved. (Again this is subject to special rules, but the net VAT payable will be lower.)
6. yes, its complicated. But it you bought a PC for the business, then you can reclaim that VAT.

[ash213]

2. for VAT purposes, ignore the 2010/11 year. Your financial year is irrelevant as far as VAT is concerned. The conventional method of checking sales is simply to add up the monthly sales totals, until you exceed £73,000. If this falls on, for example, 10 May 2011, you are required to register for VAT on 1 July, and charge VAT from that date onwards.
4. selling on ebay raises a number of questions. You will mainly sell B2C, so you can't recover VAT from customers on sales already made.
If you are selling second hand goods, then you will only pay VAT on the profit margin achieved. (Again this is subject to special rules, but the net VAT payable will be lower.)
6. yes, its complicated. But it you bought a PC for the business, then you can reclaim that VAT.

thanks for the reply.

when you say ignore the 2010/11 year, what do you mean? should i not tell hmrc that i went over the 73k threshold? im selling custom made garments on the bay.

what do you suggest i do?

cheers all

[les35]

The tax year 2010/11 does not concern HMRC as far as VAT is concerned. You need to identify when you first received income from your trading. That is your starting point. Add up the monthly sales; when you exceed £73,000, you have exceeded the VAT threshold, and the date of registration is determined by that date.

[ash213]

The tax year 2010/11 does not concern HMRC as far as VAT is concerned. You need to identify when you first received income from your trading. That is your starting point. Add up the monthly sales; when you exceed £73,000, you have exceeded the VAT threshold, and the date of registration is determined by that date.

first recieved income start of May 2010.

so i add monthly sales up, once hit 73k, that is when i have exceeded the vat threshold...

say for example that is december...how do i work out what i owed from december to april 2011.

is it 20% of all income? then i deduct 20% of vat from my outgoings...am i correct?

cheers

[les35]

Once you determine the date of registration, the next question is whether VAT is payable on all your sales. For example, do yuo sell clothes designed for children (which would be zero rated)?
identify the sales at the standard rate. Since VAT is 20%, that is inclusive. So calculated 1/6th for the VAT due.

[les35]

download VAT Notice 700/1 from the HMRC web site. That will provide you with any further details.