Register for VAT?

fawinds

Hi, I am self employed and my annual turnover is below the current VAT registration threshold of £68,000.

However I am beginning to sell to businesses in other EU countries and I understand this might imply that I need to supply a VAT number in my invoices.

Would this be true even if as I said my annual turnover is below £68,000 or could I just keep invoicing them without any VAT at all?

Many thanks in advance.

vangirl_2

No you dont have to register for VAT in this country if you turnover is less than 100,000 as of April 2010

As long as you dont exceed the VAT threshold of the country you are suppying to you wont have to register for VAT in that country either.

This is the link to the hmrc vat guide

http://customs.hmrc.gov.uk/channelsPortalWebApp/channelsPortalWebApp.portal?_nfpb=true&_pageLabel=pageVAT_ShowContent&propertyType=document&columns=1&id=HMCE_CL_001596#P220_17030

fawinds

Thank you vangirl, I will take a look at that guide.

Regards

martindow

Are you selling mainly to businesses here as well as abroad? If so there may well be advantages to registering for VAT.

JasonLVC

fawinds wrote: »

Hi, I am self employed and my annual turnover is below the current VAT registration threshold of £68,000.

However I am beginning to sell to businesses in other EU countries and I understand this might imply that I need to supply a VAT number in my invoices.

Would this be true even if as I said my annual turnover is below £68,000 or could I just keep invoicing them without any VAT at all?

Many thanks in advance.

Do you sell Goods or Services?. It makes a difference to the answer.

...and as martin has posted, do you sell mainly to other businesses or individuals?. Again, the answer may be different depending upon your answer

JasonLVC

vangirl wrote: »

No you dont have to register for VAT in this country if you turnover is less than 100,000 as of April 2010

As long as you dont exceed the VAT threshold of the country you are suppying to you wont have to register for VAT in that country either.

This is the link to the hmrc vat guide

http://customs.hmrc.gov.uk/channelsPortalWebApp/channelsPortalWebApp.portal?_nfpb=true&_pageLabel=pageVAT_ShowContent&propertyType=document&columns=1&id=HMCE_CL_001596#P220_17030

The £100,000 threshold is the distance selling threshold for EU countries selling goods into the UK to individual people (not businesses).

But we dont know what the OP is selling (goods or services) or to whom (B2B or B2C) so until we know that, not sure which way to advise.

fawinds

Thanks for your reply. I am selling services and yes, it is B2B. That is reason I was concerned, as I believe businesses my ask me for a VAT number.

In the future I may do it through a limited company, but now I don't believe the business is large enough and prefer to continue as a sole trader.

JasonLVC

The rules changed on 01 Jan 2010.

Where you supply your services to other EU countries, all you need to know is if they are in business (ie, their trading name will be a giveaway) and they based within the EU. If so, your supply to them is zero rated (ie, you charge VAT but at 0%).

If you are buying services from the EU then your Eu supplier will zero rate your supply to you provided you can prove your a business.

Your zero rated sales to the EU count towards your taxable turnover for VAT threshold purposes so if you sold say £60k of services in the UK and had another £10k from European sales then this means your total taxable turnover is £70k and so you muist register for VAT in the UK. The £68k threshold is a rolling 12 months, not a calendar year so look at your turnover in March 2010 and add up turnover each month back to March 2009 and if this = £68k or more than you need to register.

If you were selling GOODS, then the rules do require that you obtain the EU customers VAT number before zero rating the sale, but as you are not selling goods, don't worry about it.

martindow

JasonLVC wrote: »

The rules changed on 01 Jan 2010.

Where you supply your services to other EU countries, all you need to know is if they are in business (ie, their trading name will be a giveaway) and they based within the EU. If so, your supply to them is zero rated (ie, you charge VAT but at 0%).

If you are buying services from the EU then your Eu supplier will zero rate your supply to you provided you can prove your a business.

Your zero rated sales to the EU count towards your taxable turnover for VAT threshold purposes so if you sold say £60k of services in the UK and had another £10k from European sales then this means your total taxable turnover is £70k and so you muist register for VAT in the UK. The £68k threshold is a rolling 12 months, not a calendar year so look at your turnover in March 2010 and add up turnover each month back to March 2009 and if this = £68k or more than you need to register.

If you were selling GOODS, then the rules do require that you obtain the EU customers VAT number before zero rating the sale, but as you are not selling goods, don't worry about it.

This is the situation for a VAT registered business, but the OP is not registered for VAT.

It sounds to me as if you may well be better off registering even though you are below the threshold but get some advice from an expert first. Others will be better placed to suggest who best to ask.

JasonLVC

martindow wrote: »

This is the situation for a VAT registered business, but the OP is not registered for VAT.

It sounds to me as if you may well be better off registering even though you are below the threshold but get some advice from an expert first. Others will be better placed to suggest who best to ask.

Whether the OP is VAT registered or not is irrelevant - they are still making 'taxable' supplies of services.....and it is catching a lot of people out at the moment.

If they are selling to the EU, they are making zero rated sales which counts towards their taxable turnover threshold, zero rate being a taxable income.

I'm dealing with a charity at present who used to buy their IT support from France VAT free, but they now have a liability to register for VAT in the UK as the combined total of their taxxable turnover from uniform and catering sales (£25k) and about £45k of EU support services pushes them over the limit.

But I do agree that if the OP is selling services only B2B then being VAT registered would probably be a good thing - especially if they opt for the flat rate scheme (turnover < £150k) and have very few overheads/purchases to account for.

Deltona

JasonLVC wrote: »

Whether the OP is VAT registered or not is irrelevant - they are still making 'taxable' supplies of services.....and it is catching a lot of people out at the moment.

If they are selling to the EU, they are making zero rated sales which counts towards their taxable turnover threshold, zero rate being a taxable income.

I'm dealing with a charity at present who used to buy their IT support from France VAT free, but they now have a liability to register for VAT in the UK as the combined total of their taxxable turnover from uniform and catering sales (£25k) and about £45k of EU support services pushes them over the limit.

But I do agree that if the OP is selling services only B2B then being VAT registered would probably be a good thing - especially if they opt for the flat rate scheme (turnover < £150k) and have very few overheads/purchases to account for.

As you can see I'm new here, but i'd like to say thanks for giving out this useful info.
Back on topic:
I run a small business (under the VAT threshhold) and am looking into buying goods from Europe, would I have to pay their VAT?