• SAGE


0161 928 3276



We understand our clients

VAT Registration Problems and Keeping Below the VAT Limit

Newsletter issue - July 07.

The compulsory VAT registration threshold is now£64,000 for sales made in any twelve month period. If your sales are expected to top that threshold in the near future you need to apply to be registered for VAT without delay. On the VAT1 application form you need to set the commencement for your VAT registration at a date that is no more than a month after your sales reach£64,000. As it currently takes up to three months to get VAT registered, you need to be able predict your future sales quite accurately, and keep a close eye on your past sales for a rolling 12-month period.

These problems can be avoided if your sales stay just below the£64,000 threshold. Where you have one particular successful strand of your business, you may consider splitting-off that line of sales into new business to keep your core sales below the VAT threshold. However, business splitting must be done on a fully commercial basis as the VATman takes a dim view of any artificial division that is purely designed to avoid VAT registration.

A business split works best if the two new businesses are run through separate legal entities, such as a partnership and a limited company, and each services a different set of customers. For example, commercial customers buy from one business and private individuals from the other. The purchases for each business should be made completely separately, and separate accounting records and bank accounts set-up. If one business owns the premises that they both trade out of, the second business should pay a market rent for its use of the space.

The VATman can challenge a business split if he can show the separation is artificial, the two businesses are closely bound by financial, economic or organisation links, and the split results in VAT avoidance. However even if he does decide that the two businesses actually operate as one, he can only insist that they are combined for VAT purposes from the date of his decision. That may mean that both businesses must immediately become VAT registered.


To work Smarter in your Business Contact Beauchamp Charles

Contact Us

"Join our newsletter for hints, tips and tax advice"


What our clients say

Dakins Property Services

Great Results, Personable, High Integrity

Choice Events Limited

All at Beauchamp Charles are very helpful, approachable and easy to talk to. They keep me informed with key dates; I can feel totally confident that I won't ever miss any deadlines! Whoever I deal with, always deal with matters professionally and efficiently and if they are unavailable they get back to me promptly.

FT leisure Ltd

I have worked with Beauchamp Charles as our management accountants for over 20 years and have never received anything less than exceptional service. Their approach is both professional and personal. Finances and particularly tax strategies are a minefield for small businesses; Beauchamp Charles have in-depth knowledge of these area, which is comforting. They pay very close attention to our business activities and have provided financial strategies that have helped our company develop.

Fredrick Thomas Electrical and Maintenance

We have used Beauchamp Charles since company formation back in 1998. Beauchamp Charles offers us a one to one service as they are small enough to offer this dedicated service and large enough to do the work and offer best advice. They get to know us as individuals and a business, always giving sound advice. Frederick Thomas Electrical are in a stronger place thanks to the service we get from them.

Barnes Walker Landscapes Limited

We are a small business and had employed the same accountancy firm for many years. Two years ago we took the decision to switch to Beauchamp Charles after several othe local businesses recommended them very highly to us. We have not been disappointed with the service they have provided to us over these last two years.