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TonyTax
TonyTax, Tax Consultant
Category: Tax
Satisfied Customers: 15709
Experience:  Inc Tax, CGT, Corp Tax, IHT, VAT.
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I have a startup business and I have only started trading

Customer Question

Hi, I have a startup business and I have only started trading late April this year. I have just calculated my revenue and it appears I have gone over the VAT threshold by 40,000. I now have to become VAT registered and the application has been submitted by the accountant. My question is, will I be liable to pay VAT for the 30-40,000 I did not charge, my clients will most likely not agree to backdate the VAT and now I find myself in a bind where I would have to pay 8000 of VAT I did not charge out of the company profit. Please advise whether there is any workaround this. I am a startup with considerable costs and it seems very unfair to have to pay it as such. PS: the reason why I haven't registered sooner was due to poor advice from the accountant.
Submitted: 11 months ago.
Category: Tax
Expert:  TonyTax replied 11 months ago.
Hi.Let me take a look at this and I'll get back to you.
Expert:  TonyTax replied 11 months ago.
Hi again.Your clients are under no obligation to pay the VAT that you should have charged even if they could recliam it themselves through their own VAT returns. You could ask HMRC to confirm in writing that the VAT registered clients can reclaim the VAT but,in my experience, not many will react positively to that. They don't trust HMRC I'm afraid.You will almost certainly have your registration backdated and have to fund the VAT you should have charged yourself but it will have the effect of reducing your turnover as your invoice value will be treated as VAT inclusive. Look here for an example:http://taxaid.org.uk/guides/information/a-starting-point-for-the-self-employed/vat/failing-to-register-for-vatTake a look here for information on penalties:https://www.gov.uk/government/publications/vat-notice-70041-late-registration-penalty/vat-notice-70041-late-registration-penaltyIf your accountant was aware that you were approaching the VAT registration threshold, then he or she should have informed you. You may be able to negotiate with HMRC to pay over a period of time.I hope this helps but let me know if you have any further questions.
Expert:  TonyTax replied 11 months ago.
Hi.
I'm just following up and wondering if my answer helped or you still had questions.

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