VAT Registration and Compliance: 2026/27 Guide for Coventry Businesses

VAT Registration and Compliance: 2026/27 Guide for Coventry Businesses

VAT affects pricing, bookkeeping, cash flow and reporting. A business that is approaching the registration threshold should review taxable turnover regularly rather than waiting until year end.

VAT registration threshold

For 2026/27 the UK VAT registration threshold is £90,000 of VAT-taxable turnover. The deregistration threshold is £88,000. The registration test is based on taxable turnover and the timing rules can require registration before a business has completed a full accounting year.

Current VAT rates

• Standard rate: 20% for most goods and services.

• Reduced rate: 5% for specified goods and services where the reduced-rate rules apply.

• Zero rate: 0% for qualifying zero-rated supplies. Zero-rated supplies are still taxable supplies for VAT purposes.

• Some supplies are exempt from VAT and need to be distinguished from zero-rated supplies.

Why accurate bookkeeping matters

A VAT return depends on the underlying accounting records. Incorrect VAT codes, missing invoices, duplicated transactions and unreconciled bank entries can all change the VAT figure reported to HMRC. Regular bookkeeping is therefore part of VAT compliance, not a separate year-end exercise.

Making Tax Digital for VAT

VAT-registered businesses within Making Tax Digital requirements need appropriate digital records and compatible software for VAT submissions. Cloud accounting systems such as Xero and FreeAgent can support this process when the records are maintained correctly.

Common VAT risks

• Not monitoring rolling taxable turnover and registering late.

• Applying the wrong VAT rate or confusing exempt and zero-rated supplies.

• Claiming input VAT without suitable evidence.

• Using incorrect VAT codes in bookkeeping software.

• Leaving bank and control accounts unreconciled before filing the return.

When to review your VAT position

Review VAT when turnover is growing, the nature of your supplies changes, you start buying or selling internationally, or your bookkeeping records show recurring VAT corrections. Voluntary registration can also be appropriate in some situations, but the commercial effect should be considered before applying.

Official guidance: VAT registration thresholds and VAT rates.

For help with VAT returns in Coventry, see VAT and Accounting Services. For the underlying records, see Bookkeeping Services Coventry & Warwickshire.