HMRC have aligned completion of the full 2008-09 Self Employed Tax Return Form with the 2008-09 £67,000 Vat Registration Threshold limit.
In 2007-08 HMRC introduced the new self employed tax return in 2 versions the full tax return and the short tax return replacing the old self assessment tax return form. The determing factor as to whether the full or short tax return was completed was set at a sales turnover of 64,000 which was also the vat threshold 2007-08 above which a business is legally responsible to be vat registered.
Over the past year I have rang HMRC tax office and asked if this vat and self employed tax return limit alignment was policy and they refused to answer saying they did not know. Well now we do know as they have done it again.
The important tax implication of this is serious as a business whose sales turnover exceeds the vat registration threshold is liable to pay value added tax on those sales whether they are vat registered or not vat registered.
Therefore if your sales turnover is over the vat registration threshold and you are not vat registered you will be advising HMRC tax office of this fact on your self employed tax return form, full version, which I would expect likely to trigger a potential HMRC enquiry to get the vat from you.
If business sales turnover exceeds the vat thresold limit that business is liable to pay vat on those sales regardless of whether it was vat registered or included the vat in its sales prices.
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