Ryan FowlerHM Revenue and Customs (HMRC) has launched a new digital tool designed to help businesses estimate the impact of registering for VAT. The VAT Registration Estimator was developed in response to feedback from small businesses, who indicated that an online tool would be useful for determining when their turnover might necessitate VAT registration and how it would affect their profits.
Businesses must register for VAT if their total VAT taxable turnover for the previous 12 months exceeds £90,000, known as the ‘VAT threshold’ (previously £85,000 until 31 March 2024). Additionally, businesses expecting their turnover to exceed the £90,000 threshold in the next 30 days, as well as overseas businesses supplying goods or services to the UK, must register regardless of their VAT taxable turnover.
The new estimator tool can assist any business in understanding what VAT registration could mean for them. It also provides links to further information about the registration process and is useful for businesses operating below the threshold and considering voluntary registration.
Jonathan Athow, HMRC director general for customer strategy and tax design, stated, “We know that the majority of our customers want to get their tax right. We have listened to what businesses have said, and the new tool is designed to help them understand VAT registration, including when they might be required to register. The VAT Registration Estimator has been developed in partnership with small businesses and trade representatives who tested the online tool and gave feedback before its launch. We hope it will support businesses’ understanding of VAT registration, especially when combined with our guidance and other services.”
Kevin Sefton, member of the Administrative Burdens Advisory Board (ABAB), remarked, “Businesses need to know before they hit key tax thresholds. Tools and guidance can help them prepare. I’m pleased to see this new VAT registration tool from HMRC that helps a business understand the different types of supplies it makes, and what this means for VAT registration.”
Karen Thomson, another ABAB member, added, “I volunteered to be a tester for the new VAT tool. I am not a VAT expert so approached the experience as if I were a business with no knowledge of VAT. Having made some comments, along with other stakeholders, I have now used the final tool and find it very useful. I like that when you are asked for information there are examples, links to guidance where appropriate, and help on completing the boxes. A lot of work has gone into this tool, and I believe stakeholder views have been considered to ensure the customer has the best experience possible.”
With around 300,000 new VAT registrations each year, the VAT Registration Estimator aims to make the process clearer and more accessible, ensuring businesses can navigate their VAT obligations effectively.
