VAT Made Simple: The 3 Questions Every Business Owner Asks - Arnold Hill & Co.

VAT can be one of the most confusing parts of running a business, even for experienced business owners. The rules are detailed, the thresholds keep changing, and mistakes can be costly.

At Arnold Hill & Co LLP, we get asked a lot of VAT questions, but here are the three we hear most often - along with our answers to help you stay compliant and confident.

Q1: “What can I claim back on VAT?”

The good news: you can usually reclaim VAT on goods and services that are used exclusively for business purposes. Common examples include:

• Computer and office equipment
• Business travel and accommodation
• Business software
• Professional services (e.g. legal or accountancy fees)

However, there are some common pitfalls to avoid:

• Client entertainment – VAT is not reclaimable.
• Personal use items - even if used “sometimes” for work, you can only reclaim the business-use proportion.
• Invoices without VAT – you need a valid VAT invoice from a VAT-registered supplier before making a claim.

Q2: “When do I need to register for VAT?”

You must register for VAT when your taxable turnover exceeds £90,000 in any rolling 12-month period (2025/26 threshold).

But don’t wait until you have to. Voluntary registration can sometimes be an advantage, for example:

• Reclaiming input VAT on your purchases
• Improving your credibility with clients and suppliers

The right timing can make a real difference - and planning ahead can save you stress and money. And if you’re not sure where to start, we can take care of the registration process for you.

Q3: “What happens if I file late?”

HMRC now uses a penalty points system for late VAT returns:

• With each late submission, you receive 1 point
• Penalties kick in once you reach 4 points
• Interest is also charged on late payments

It's easy to fall behind, but it's just as easy to avoid with the right support.

How we help

We know VAT can feel like a headache. That’s why we give our clients the structure and reminders they need to stay compliant:

• Clear schedules so nothing slips through the cracks
• Automated email reminders and personal follow-ups
• Regular VAT reviews to spot risks early

Whether you’re just starting out or already established, our outsourced finance and bookkeeping team takes the stress out of VAT, so you can focus on running your business.

 Want to take VAT off your to-do list? Get in touch with us today. 

Author, Grace Saunders - Outsourced Finance

Grace.Saunders@ArnoldHill.co.uk