You must register for VAT if you receive goods in the UK from the EU worth more than £82,000 in a single 12 month period or your taxable sales exceed that figure. You must also register for VAT if you expect to exceed that figure in any 30 day period.
You can also register for VAT voluntarily, if your turnover is below £82,000 p.a. Voluntary registration benefits two groups of trader in particular:
Contractors, consultants, freelancers and so on who can take advantage of the Fixed Rate Scheme
Business to Business traders (B2B) who can pass on a VAT charge to their customers and who would not otherwise be able to claim VAT on their purchases.
Fixed Rate Scheme (FRS)
The FRS scheme will allow you to add VAT of 20% to your invoices to your clients but pay a lower rate back to HMRC. As an example, IT contractors pay 14.5% of the gross sale value to HMRC. There is also an additional discount given of 1% in the first year of the scheme.
To join the scheme your turnover must be less than £150,000 p.a. Furthermore, you won’t be able to claim VAT on your purchases. An exception is made in respect of the purchase of capital assets over £2000.
VAT for non-residents
Non-residents wishing to register their UK companies for VAT may experience some difficulties if they do not have a business establishment in the UK. HMRC does not consider a Registered Office or business or virtual mail address as a business establishment.