The situation
An online homeware seller had scaled fast over 18 months. With attention on marketing and stock, nobody was watching the rolling 12 month turnover figure, which had quietly passed £90,000.
The problem
Once past the threshold, the business was liable for VAT on its later sales, even though it had not been charging it. Left longer, the backdated VAT and possible penalties would have grown, and the wrong scheme could have cost more than necessary.
What we did
- Established the correct date. We identified exactly when the rolling turnover crossed the threshold.
- Registered and reviewed schemes. We registered the business and compared the standard and Flat Rate schemes for its cost profile.
- Set up digital records. We put Making Tax Digital compatible software in place so returns are clean going forward, and reclaimed pre registration VAT on stock.
What changed
The business was brought fully compliant, the pre registration VAT reclaim softened the impact, and it now runs on the scheme that costs it least, with returns filed on time. Turnover is monitored monthly, so there are no more surprises.
What this shows
Fast growing online businesses can cross the VAT threshold without realising, because it is a rolling figure, not a tax year one. Watching it monthly, and registering on the right scheme, avoids a costly catch up.
Sales growing fast?
We watch your VAT threshold, register you at the right moment on the best scheme, and keep your records digital and compliant, so growth never trips you up.