AR Company Formations

Do not avoid registering for VAT by artificially separating business activities

Your VAT taxable turnover includes the value of any goods or services you supply within the UK, unless they are exempt from VAT. This means you must also include any supplies you make that would be zero-rated for VAT. When calculating your VAT taxable turnover you will of course include your sales, but for VAT purposes, you should also include the value of certain other types of supply:

  • Goods or services that you exchange or barter - see the link below
  • Supplies of certain services that you receive from suppliers in other countries that you have to 'reverse charge' - see the links below
  • where you use your own labour to construct certain building or civil engineering works for your own business use with an open market value of £100,000 or more - see the link below
     

You must not attempt to avoid registration by artificially separating business activities to reduce your turnover. See the section in this guide on artificial separation.
From 1 January 2010, the reverse charge could apply to many more services you receive from abroad, because a number of key changes to the place of supply rules take effect on that date. There will also be other substantial changes to the VAT rules for international transactions. It's important that you consider now whether you will be affected by these changes and whether you may need to make changes to any of your software, systems or procedures.
 


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