Registering for VAT
We’ve all heard of VAT of course. VAT is a tax charged on most business-to-business and business-to-consumer transactions in the UK. Being ‘in business’ is defined as earning an income by carrying on a trade or profession; you provide a membership in return for subscriptions; you offer other activities as a club or charity or if you charge admission to a premises. It’s a tax that your events business will have to pay to the government if you’re over the threshold, so firstly you’ll need to know if you’re required to register.
Who Should Pay VAT?
Any business that has recorded a turnover of £67,000 or more in the last 12 months is legally required to register for VAT. This is the current VAT threshold (at March 2009) but it does change so it’s wise to keep a close eye on it if you’re near that figure.You should also register if you think your turnover may go over the threshold in the next 30 days, if you takeover a VAT-registered business as a going concern, or if you acquire goods from other EU countries totalling more than £67,000 in a year.
Voluntary Registration
In the world of events, or indeed many other business sectors, sometimes registering voluntarily for VAT can be a good idea anyway. It may give the impression that you are, as a business, worth more than the reality, thereby presenting a more viable appearance to your clients. Non-registered companies run the risk of looking a bit ‘cottage industry’ which is no good if you’re pitching for corporate business. It will also affect the kind of agency clients who will book your services – for example, if you supply music or casino tables to an event management company and you are not VAT registered, the event management company will be required to charge, and pay, VAT for your services. If they cannot claim VAT back from their supplies this hits their pockets, making you a less palatable prospect for them to book.Anyone in business or starting a business can pretty much register voluntarily for VAT, but must of course adhere to the invoicing and accounting procedures that come with VAT registration.
The Benefits of Being VAT Registered
Apart from looking good to your clients, there are a fair few advantages of being able to charge and claim back VAT. For example if you sell zero-rated items but buy standard rated items you will receive a VAT refund, or if you don’t sell or won’t sell anything during a VAT accounting period, you can still claim VAT. Or it could even be that you have the use of the VAT your clients pay you before you have to pay it to the government. Kind of like borrowing the money!Just be aware that at some point you’re going to have to pay all the VAT you have charged so if you’re ‘borrowing’ it, make sure you have it back in your account by the time the next tax return comes round!
