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Part of When should a small business hire a VAT accountant in the UK?
When should a small business hire a VAT accountant in the UK?
When to hire a VAT accountant for a small business in the UK: the registration threshold, MTD quarterly filing, common return errors and cost questions.
What to take away
- The trigger to hire is taxable turnover, not the start of the tax year: registration becomes compulsory once you cross HMRC's threshold.
- MTD for VAT has made digital records and quarterly filing the default, so the bookkeeping job is continuous rather than annual.
- Most VAT errors are classification errorsexempt versus zero-rated sales, partial exemption, and input tax claimed on blocked items.
- An accountant is usually cheaper before the first return than after a year of uncorrected records.
- Hire before the first return if you have mixed taxable and exempt income, sales outside the UK or overseas suppliers; wait while your sales sit at one rate and turnover is stable.
Registration is a turnover test, not a diary date
VAT registration is compulsory once taxable turnover over any rolling 12-month period passes the threshold. HMRC's registration guidance sets it at £90,000 from 1 April 2024, with a deregistration threshold of £88,000.
VAT registration thresholds
- £90,000registration threshold from 1 April 2024
- £88,000deregistration threshold
- 30 daysforward look if turnover expected to exceed
There is also a forward look test. If you expect turnover to exceed the threshold in the next 30 days, you must register even if the past 12 months stayed below it.
A worked example makes the rolling test concrete. Taxable turnover for the 12 months to 31 March was £84,000.
April invoices then add £8,500 and nothing significant drops out, so the 12 months to 30 April come to £92,500 and cross the £90,000 threshold. HMRC must be told by 30 May, and registration runs from 1 June.
The trap is what counts as taxable turnover, because exempt sales such as most financial services fall outside the calculation. Zero-rated sales, such as most food and children's clothing, count in full even though no VAT is charged on them.
Voluntary registration below the threshold can work well when your customers are VAT-registered and you carry plenty of input tax. It adds admin and raises the price of your output for non-registered buyers.
Where the line between bookkeeping, filing and advice matters, it helps to understand the difference between an accountant and a bookkeeper before you pay for either.
Where VAT returns go wrong
Errors cluster in a few places. Partial exemption, where a business makes both taxable and exempt supplies, forces an apportionment of input tax that many small ledgers handle by guesswork.
Where VAT returns go wrong
- Partial exemption apportionment guessed
- Blocked input tax on entertainment and cars
- Reverse charge on overseas services
- Pre-registration recovery missed
Input tax on business entertainment, most cars and some staff benefits is blocked, so it cannot be reclaimed at all.
Reverse charge rules apply to many services bought from overseas suppliers, so the VAT is accounted for on the return rather than taken from the supplier's invoice.
Each of these produces the same symptom: a return that adds up but is wrong in substance, which HMRC can assess later with interest.
Pre-registration recovery is the point most summaries skip. A newly registered business can often reclaim VAT on goods still on hand, and on services bought in the six months before registration, even though the invoices pre-date the VAT number.
When to hire a VAT accountant, and when to wait
The table is a starting position, not a threshold test.
Handle in-house or hire
Handle in-house
- One trade, standard-rated
- Workable
- Mixed taxable and exempt
- High risk
- Sales outside the UK
- Place of supply risk
- Overseas supplier services
- Reverse charge risk
- Property plus trading company
- Partial exemption risk
- Turnover well below threshold
- Monitoring enough
Hire a VAT accountant
- One trade, standard-rated
- Optional
- Mixed taxable and exempt
- Yes, before first return
- Sales outside the UK
- Yes
- Overseas supplier services
- Yes
- Property plus trading company
- Yes
- Turnover well below threshold
- Not yet
When to hire, and when to wait
Handle in-house
- One trade, standard-rated sales, turnover just over the threshold
- Workable with software and monthly checks
- Mixed taxable and exempt income
- High risk of apportionment errors
- Sales to customers outside the UK
- Place of supply rules change with each customer
- Services bought from overseas suppliers
- Reverse charge entries must be posted correctly
- Letting property alongside a trading company
- Partial exemption and option to tax interact
- Turnover well below the threshold and stable
- Monitoring is enough
Hire a VAT accountant
- One trade, standard-rated sales, turnover just over the threshold
- Optional
- Mixed taxable and exempt income
- Yes, before the first return
- Sales to customers outside the UK
- Yes
- Services bought from overseas suppliers
- Yes
- Letting property alongside a trading company
- Yes
- Turnover well below the threshold and stable
- Not yet; review each year
Typical UK quotes vary by region and volume. Filing only usually runs at £30 to £75 per quarter, and bookkeeping plus VAT returns at £150 to £400 a month.
A one-off registration review is often £200 to £500, and partial exemption work is usually quoted separately, often from £500. The drivers are how many VAT rates apply, how much reconciliation the ledgers need, and whether the provider handles HMRC correspondence.
Accountant Scout lists VAT accountants by region in its own directory. The professional bodies run public finders as well, including ICAEW's Find a Chartered Accountant, ACCA's Find an Accountant and the AAT directory of licensed members.
Filing dates and the MTD rhythm
Making Tax Digital for VAT means records must be kept digitally and returns filed through compatible software rather than typed into the HMRC portal. Spreadsheets remain allowed, provided a digital link carries the figures across and the underlying records are digital.
Returns are due one calendar month and seven days after the end of the period you have chosen, as HMRC's guidance on sending a VAT Return explains.
The practical consequence is a monthly rhythm: reconcile, check classifications, file, and note what changed and why.
Landlords who also trade through a company meet these questions twice, and this guide to Making Tax Digital for landlords sets out the sequencing.
What a VAT accountant does each quarter
- Reconciles the VAT control account to the sales and purchase ledgers, not just to the bank.
- Files the return through MTD-compatible software before the deadline, with the workings attached.
- Keeps the workings so the next quarter, or an HMRC enquiry, can follow them.
Ask whether the quote covers reconciling the VAT control account, amending a return and answering HMRC letters, and what the fee becomes if the records need repair.
Common questions
Does a small business need an accountant to register for VAT?
No, registration can be done online. The value of help sits in classification, where the 12-month test is easy to get wrong.
How much does a VAT accountant cost?
Fees are usually quoted monthly or per return, so ask what the quote covers: reconciliation, filing and correspondence with HMRC. A quote that stops at filing leaves the costly record repair with you.
Can I keep my own records and still use an accountant?
Yes, and it is common. Agree who checks classifications and who holds the MTD software subscription, since that decides who can file.
What happens if a VAT return is late?
HMRC runs a points-based system for late submission, so each missed return adds to a running total. Interest also accrues on late payment.
