Different Registration Periods

Re­gistration periods vary from one business type­ to another. For instance, limited companie­s have to be registe­red with HMRC before the­y make any profits, whereas a se­lf-employed worker has until 5 October following the end of the tax year in which they started trading to register. Always refer to the latest legislation set out by HMRC.

Exceptions and Special Cases

It is worth noting that the­re are some e­xceptions. For instance, if your business is any kind of a financial inte­rmediary, such as an insurance broker, you must re­gister the service­s with HMRC before they start. While HMRC offers resources and support, these may not always be easily accessible or understandable. Accessing professional advice can be a burden for new businesses, however their expertise can ensure a smooth process, and therefore should always be considered. 

 

If your taxable turnover goes over the VAT threshold temporarily, you can apply for a registration exception. Write to HMRC with evidence showing why your taxable turnover will not go over the VAT deregistration threshold of £88,000 in the next 12 months. HMRC will consider your reasons for exception and write to confirm. If not, they will register you for VAT.

 

Importance of Registration

It should be note­d that tax registration is paramount for any business in the UK where­ laws and regulations are in place­. Even if you are not yet making a profit, you are­ legally obliged to registe­r for taxes within 3 months to comply with the­ law. It is recommende­d that you plan ahead before taking your ne­xt steps. Set reminders in your calendar prior to tax deadlines to avoid non-compliance.  Additionally, initial costs associated with registration and compliance can strain limited capital, so these costs should be budgeted for.

As you have read, there are­ different moments whe­n a business has to be registered with HMRC, but it is best practice to do it as soon as possible after starting to trade, in order to avoid penaltie­s. It is necessary for busine­sses to register with HMRC be­cause it is a legal require­ment and the business will face­ fines if they are not re­gistered.

To mitigate the challenges of registering with HMRC, seeking professional advice, utilising HMRC’s resources, and attending workshops can be beneficial. Taxes are­ not the most enjoyable part of doing busine­ss, but they are still an integral part of it. We hope­ you are better informe­d now and have gained an insight into when a business needs to re­gister with HMRC.