Glossary

VAT When to Register

If you are in business, you must register for VAT if your turnover for the previous 12 months is above Ł73,000.

This is known as the VAT registration threshold. It changes regularly, so you should regularly check your turnover against the current threshold.

You must also register for VAT if:

you are selling goods into the UK from another country in the EU and exceed the 'distance selling threshold'

you acquire goods from other countries in the EU totalling more than Ł67,000 in a year

The HMRC guidance on how to do this is here:

This must be adhered to otherwise the vat could end up coming from your sales value.

When you register you can look back over your purchases and in some circumstances you can reclaim vat:

for goods: you can reclaim VAT up to three years before you registered for VAT
for services: you can reclaim VAT up to six months before you registered for VAT

There are certain conditions which need to be met to be able to do this so have a look at the full guidance which can be found here.

Note these conditions in particular:

You can reclaim VAT on goods you bought or imported no more than three years before you were registered for VAT if the goods:

were bought by you as the 'person' who is now registered for VAT
are for your VATable business purposes, eg they do not relate to any exempt items that you sell
are still held by you or they have been used to make other goods you still hold

You can't reclaim VAT on goods that you've completely used up before you registered for VAT such as petrol, electricity or gas.

So for items already sold onto customers you cannot claim the vat.