VAT returns and VAT registration for small businesses
You must register for VAT if your taxable turnover for the last 12 months goes over £90,000, or you expect it to in the next 30 days. Once registered, you send VAT Returns through Making Tax Digital software. IB&Co Accountants in Canary Wharf registers small businesses for VAT, prepares and files their returns, and deals with HMRC queries.
When do I need to register for VAT?
You must register if either of these applies:
- your total VAT taxable turnover for the last 12 months goes over £90,000 (the VAT threshold)
- you expect your taxable turnover to go over £90,000 in the next 30 days alone
If you went over the threshold in the last 12 months, you must register within 30 days of the end of the month in which you went over. Your effective date of registration is the first day of the second month after you went over. Using HMRC’s own example: if your rolling turnover first passes the threshold on 15 July, you must register by 30 August and you are registered from 1 September.
The test is a rolling 12 months, not your accounting year or the tax year. That is the point where many growing businesses get caught out, so we track it for clients who are getting close.
Should I register for VAT voluntarily?
You can register even if your turnover is below £90,000. It can make sense if most of your customers are VAT-registered businesses that can reclaim the VAT you charge, or if you have significant VAT on your own costs to reclaim. It rarely helps if you sell mainly to the public, because your prices go up or your margin comes down. We model both options with your own figures before you decide.
When are VAT Returns due?
For most businesses, the deadline for submitting the return online is one calendar month and 7 days after the end of the VAT period, and that is also the deadline for your payment to reach HMRC. A quarter ending 31 March, for example, is due by 7 May.
Every VAT-registered business must keep digital records and file through software that is compatible with Making Tax Digital, whatever its turnover. Copy and paste between programs does not count as a digital link. Our MTD Software Set-up & Training service gets this right from the start.
What happens if a VAT Return is late?
Late returns and late payments are penalised separately.
- Late returns: each late return earns a penalty point. When you reach the threshold for your filing frequency (4 points for quarterly filers), you get a £200 penalty, and a further £200 for each later late return while you are at the threshold.
- Late payments: there is no late payment penalty if you pay within 15 days of the due date. After that, the first penalty is 3% of the VAT owed at day 15, plus 3% of what is still owed at day 30. From day 31 a second penalty is charged daily at a yearly rate of 10% until you pay. Late payment interest runs from the first day your payment is overdue.
- Inaccurate returns: if an error is careless or deliberate, HMRC can charge a penalty of up to 100% of any tax understated or over-claimed.
Which VAT scheme is right for my business?
The standard rate of VAT is 20%, with reduced rates of 5% and 0% for certain goods and services. On top of standard accounting, HMRC offers schemes that can make VAT simpler:
- Cash Accounting Scheme: you pay VAT when your customers pay you, rather than when you invoice. You can join if you expect your VAT taxable turnover in the next 12 months to be £1.35 million or less.
- Flat Rate Scheme: you pay a fixed percentage of your VAT-inclusive turnover, set by your trade. You can join if your VAT turnover is £150,000 or less, excluding VAT. Businesses with very low spending on goods pay a higher rate of 16.5%.
- Annual Accounting Scheme: one return a year with interim payments.
The right choice depends on your margins, your customers and how you get paid. We compare the schemes against your real numbers rather than a rule of thumb.
How IB&Co handles your VAT
- check whether you need to register, and when
- register you with HMRC and set up the right scheme
- connect your bank feeds to QuickBooks or Xero (we are a QuickBooks Gold ProAdvisor)
- review each quarter’s figures with you before anything is filed
- file your VAT Returns as your agent and remind you what to pay and when
- deal with HMRC questions, corrections and penalty appeals
VAT usually sits alongside your bookkeeping and year-end work, so we keep the three in step. If you also use subcontractors in construction, see CIS Returns & Subcontractor Verification.
Frequently asked questions
£90,000 of VAT taxable turnover in a rolling 12-month period, or an expectation of going over £90,000 in the next 30 days on its own.
Within 30 days of the end of the month in which your rolling 12-month turnover went over £90,000. You are registered from the first day of the second month after you went over.
Usually one calendar month and 7 days after the end of your VAT period. Your payment must reach HMRC by the same date.
You can ask HMRC to cancel your registration if your taxable turnover falls below £88,000, unless certain exceptions apply. We check whether it is worth doing before you apply.
Yes. All VAT-registered businesses must keep digital records and file VAT Returns through compatible software, whatever their turnover, unless they are exempt.
After a Discovery Call we send you a written proposal that sets out the scope, such as quarterly returns, scheme advice or registration, before any work starts.
Get your VAT sorted
Book a Discovery Call and we will check your registration position, your scheme and your next filing date.
Call 020 7164 0225 or visit us at Level 37, 1 Canada Square, Canary Wharf, London E14 5AA. Open Monday to Friday 9:00 to 18:30 and Saturday 10:30 to 16:30.
Checked on 11 November 2026. This page is general information based on HMRC guidance at that date, and is not advice for your circumstances.
