Is VAT punitive for threshold contractors?

[TheCyclingProgrammer]

No VAT is an annual threshold - so if you go over it in the year all your services are VATable (even ones you invoiced and didn't charge VAT on)

You then have two choices - go back to the client and tell them you are a muppet and forgot to charge VAT or pay it out of pocket.

This is not correct. You become liable to account for VAT on your sales as of your registration date - it's not backdated unless you ask for it to be backdated or were late in registering for some reason. Only if you have issued invoices over past your registration date would you need to re-issue VAT invoices. And it's a rolling annual threshold too.

[northernladuk]

This is not correct. You become liable to account for VAT on your sales as of your registration date - it's not backdated unless you ask for it to be backdated or were late in registering for some reason. Only if you have issued invoices over past your registration date would you need to re-issue VAT invoices. And it's a rolling annual threshold too.

I think that's a double

He's certainly racking them up today.

[gables]

This is not correct. You become liable to account for VAT on your sales as of your registration date - it's not backdated unless you ask for it to be backdated or were late in registering for some reason. Only if you have issued invoices over past your registration date would you need to re-issue VAT invoices. And it's a rolling annual threshold too.

Umm, haven't I already said this? TBH I like it when I'm correct

[TheCyclingProgrammer]

Umm, haven't I already said this? TBH I like it when I'm correct

Yes, but I don't always read every reply before I respond

[Glencky]

VAT is literally the most straightforward part of the accounting, financial and tax side of being a contractor in this market. It astonishes me that you can get to the stage of operating a limited company and have no idea whatsoever how VAT works.

In fact, it astonishes me you can get to working in a professional career, even if you had always been a permie but obviously *have paid VAT yourself in your personal life* without understanding how it works better than your OP demonstrates.

You've already been given the pointers, but truly - you are very well advised to spend significant time reading up not only on VAT but on all other tax-related aspects of running your company.

[ContractorScum]

Christ, this is terrifying

[notasockie]

Christ, this is a trolling sockie

FTFY.

[Jeremiah@RHJAccountants]

Don't forget the potential you can reclaim VAT on your first VAT return even.

There’s a time limit for backdating claims for VAT paid before registration. From your date of registration the time limit is:
•4 years for goods you still have, or that were used to make other goods you still have
•6 months for services

You can only reclaim VAT on purchases for the business now registered for VAT. They must relate to your ‘business purpose’. This means they must relate to VAT taxable goods or services that you supply.

you may be able to claim back the VAT on certain asset purchases with a VAT-inclusive price of £2,000 or more.

[MrButton]

you may be able to claim back the VAT on certain asset purchases with a VAT-inclusive price of £2,000 or more.

Why does it have to be over £2k?

[northernladuk]

Why does it have to be over £2k?

Are you asking where is the rule that says 2K or just discussing why the limit has been set to 2k?

https://www.gov.uk/vat-flat-rate-scheme

•you can’t reclaim the VAT on your purchases - except for certain capital assets over £2,000