MASTER UK
SMALL BUSINESS
ACCOUNTING

VAT registration isn't optional when you hit the threshold - it's mandatory. Yet countless small businesses stumble into legal trouble by misunderstanding the rules or simply ignoring them.

The current VAT registration threshold is £85,000 in annual turnover. But here's what they don't tell you: you need to register if you expect to exceed this amount in the next 30 days, not after you've already crossed the line.

Missing the registration deadline can result in penalties, back-dated VAT charges, and a very uncomfortable conversation with HMRC. Don't let bureaucratic confusion destroy your business.

Cash flow problems kill more businesses than competition ever will. The harsh reality is that profitable companies can still go bust if they can't pay their bills when they're due.

Prevention starts with brutal honesty about your payment terms and collection processes. If you're giving customers 60 days to pay while your suppliers demand payment in 30, you're building a time bomb.

Implement weekly cash flow forecasting. Track every penny coming in and going out for the next 13 weeks. It's tedious work, but it's the difference between surviving and shutting down.

HMRC doesn't randomly select businesses for investigation. They use sophisticated data analysis to identify anomalies and inconsistencies that suggest potential tax avoidance or evasion.

Red flags include: significant changes in profit margins without explanation, high levels of cash transactions, unusually low wages for directors, and discrepancies between lifestyle and declared income.

The best defense is perfect record keeping and transparent reporting. If you can't explain every entry in your accounts, you're not ready for scrutiny.

Small businesses lose thousands every year by failing to claim legitimate expenses. The rules are complex, but the money saved is worth the effort to understand them properly.

Home office expenses, vehicle costs, professional development, and equipment purchases can all reduce your tax bill when claimed correctly. The key is maintaining detailed records and understanding the distinction between personal and business use.

Don't leave money on the table through ignorance, but don't risk penalties through aggressive claiming. Know the rules, keep the receipts, and claim what's rightfully yours.