May 11 2015.

New research from Direct Line for Business reveals over a third (36 per cent), approximately 780,000, of the UK’s micro business owners are not aware of the VAT registration threshold - £82,000 as of 1st April 2015 – where they have the obligation to register for VAT with HM Revenue & Customs (HMRC).

Of the businesses that are aware of the threshold, nine per cent, equivalent to around 122,000 UK businesses, have limited sales to remain under the VAT limit. One reason firms wish to remain under the threshold is to offer goods and services at a lower rate than competitors in the market. Of those micro enterprises that have limited sales, 27 per cent temporarily ceased trading to remain under the VAT registration threshold.

HMRC says it is important small business owners identify what products, goods and services are liable for VAT. Small and micro enterprises should also explore opportunities to reclaim VAT on purchases made by their company, as they may be able to significantly reduce their business expenses.

Companies wanting to find out more about the VAT obligations and how to register can find more information from the HMRC website HERE.