To ask how much I've fucked up? HMRC

No, she is substantially better off being LTD. There is no “it depends”. It is fact based on what she has posted.

Is the OP paying the accountant for a more than once a year compliance service though? Apologies if I've missed that.

If you want a regular (ie at least quarterly) management accountancy service there would be a substantial fee attached.

We took over a business well below the Vat threshold. I did suspect it was better than they said because the till was a tupperware box in a filing cabinet. We put in a till banked every red cent, put in a card machine. Reinvested in new plant, shop refit. Computer and software system. Within three years had quadrupled turnover. At some stage accountant said woah, register for Vat. So we did. We then had a vat inspection. Somewhat nerve wracking. They were there for two days, found £44 I think.

Was a bit annoying because the previous business owners were the guilty ones not us.

Requirement to register for VAT is when 12months revenue is predicted to be over the threshold (£90k). It is then payable quarterly in arrears and does not need to match the personal accounting year. I have a small business and my accountant advised when I needed to register for VAT and manages all the VAT returns for me. For example my VAT quarters are Sept - Nov//Dec-Feb//Mar -May//June-Aug. My business was incorporated one year at the end of August and so our Corporation Tax return runs Sept-Aug.

Always best to be honest- tell them. I'm surprised you accountant didn't give you the heads up, he/she should have done.
I would advise always be on top of it , even if you have an accountant- the change would be serious if it was downward-how do you know how much you can spend without having a problem if you have no idea what is coming in?

Where does it say it's a ltd company?

Well said, I was hoping someone would post here with a more reasonable/rounded comment rather than several pages of absolute nonsense.

I was just about to draft a response just like yours when I saw yours so you've saved me a lot of time.

People need to realise that things have changed and it's not the automatic default that limited companies save tax anymore - at most income points, they don't now. Likewise people need to realise that VAT is the same whether you're a sole trader or limited company, same with employing people.

And a big yes to how an accountant could possibly be at fault if the client hasn't given them any information about how the business is growing - they're not mind readers, and yes, lots of clients only want to spend the bare minimum on accountant's fees so deliberately only give you the "books" once a year, and make no contact at all at other times, so we're really working blind for 11 months of the year.

As you say, people really shouldn't be taking tax advice from randoms on the internet. It's just like the old "bloke in a pub" nonsense.

A friend of mine with a successful business is weak on the administrative side so has a book keeper one day a month to handle the purchase and sales ledger side. She chases up monies owing from clients, insurance, etc. it's made an enormous difference.

Another FCA here. OP seems to have disappeared, which is perhaps what the problem is.

You should have registered for VAT from the point at which your turnover hit £90k in a rolling 12 month period. You need a proper sales invoicing system ASAP.

How will your customers react to suddenly paying an extra 20% on everything they purchase from you? If they are VAT registered businesses themselves it's not an issue, but it is if they are individuals who can't recover the VAT.

Please start communicating with your accountant more. It's your business and your responsibility to run it properly. Ask them for a meeting and for help in registering for VAT.

Sounds like you have a bookkeeper rather than an accountant.
You need to spend a bit more money and get an accountant. They’ll sort all this out for you.
Don’t panic, it’s all going to be fine.

Do not upset HMRC with vat, the Customs VAT section are not as lenient as Income Tax and Corporation tax sections. Get registered asap fo VAT and pay up urgently. Use your accountant that's what you are paying them for, protection from HMRC.

OMG the ignorance on this thread is astounding.
Please don’t take tax advice from randoms on the internet.

There are lots of reasons why you may/ may not be better off as a limited company or may/may not need to register for VAT. Should also say that the general limits on sole trader v limited and which is ‘best’ have changed a lot over recent years. Only your accountant will be able to give you considered advice based on your individual circumstances.

Many people deal with accountants once a year and that is all they want and are willing to pay for. They are still always encouraged to contact when there are changes though. Other clients talk to us monthly and so in those cases yes we would be expected to make advance suggestions re VAT and business structure. But for a stable £30k turnover business with no indication of changes, how on earth is the accountant expected to know?

Solidarity with the actual qualified accountants on here who aren’t mind readers and don’t magically know what has gone on when a client hasn’t told them of changes.
@Mardyybum @topcat2014 @Elle2018

Would you have already submitted this particular one?

You need a proper accountant and book keeper, use XERO and login in at the very least weekly.

you need to potentially go limited and VAT registered, you need to pay yourself via salary so you are keeping your NI contributions, you need to fully understand net, gross profits, personal taxs and corporation tax.

Not sure what your FY is but you could have put a huge chuck into to pensions as a company director you can pay up to £60k out of the business into a pension which reduces your corporation tax bills and saves you so much money long term.

Pay yourself a proper month salary in dividends.

in essence I also just wanted to say bloody huge congratulations OP but stay close to the money, learn you numbers, learn the rules and start to have wayyyyy more control so you don’t spend on tax that you don’t need too.

HMRC are not your issue here that’s a minor issue it’s your lack of business and money knowledge m. Please fire your accountant they should be advising you on all of these they should be your right hand person. They sound like lazy idiots.

also ensure you have full access to your gateway HMRC keep ultimate control at all times.

You are really better asking your accountant. There's too much at stake to be seeking advice from random strangers on the Web. HMRC penalties can be high. You can't leave anything to chance.

Wow well done!
But you really need to get a better accountant that stays across things more than once a year!
Also you really need to go limited.
And I would also advise that you get more business savvy and stay on top of things!
Speaking as a business owner btw

Please can people who don't actually know about tax just stop giving tax advice?

Re tax free childcare, this happened to us. A couple of years ago, DH got a huge bonus which took him well beyond £100k right at the end of the tax year. I'd told HMRC all year that we would be under, because the timing of the bonus wasn't guaranteed. We just paid back the tax free childcare and funded hours. Not pleasant, but how it goes. HMRC didn't care so long as the tax was paid. I'd message them through the online service to let them know. Bigger issue is whether you have the funds to pay the tax.

Considering VAT was a good shout. Has your accountant mentioned VAT at all? Don't stress just yet, as what you do might not be VATable, but that's one to sort out asap if needed.

You say you've made over £100k profit, is that after tax deductions for what you've spent on the business? That's also one to check with your accountant.

In future, you should ask them to do more regular updates. Understanding the year to date position at regular intervals will help you to plan for any tax, eg making pension contributions.

Just tell them up front. If you tell them, they will help you. As long as you're not hiding anything you'll be fine. I helped my elderly mother in law with HMRC once. She was childminding and didn't realise she had to fill in self assessment tax returns. They let me submit 6 years worth, all at once. No penalties.

VAT returns are usually every 3 months.

OP. Please just speak to your accountant, not a MN forum

Don’t sweat it. Be honest.

You just have to pay back the childcare etc claimed. I had the same once with working tax credit when I had a back payment of several years worth of underpayment. The HMRC refused to look at it spread over the 8 years so I was taxed 40% and had to pay back my tax credits. This had to be done via a payment plan because I did not have the money as I had spent the lump sum on a volunteering trip to Peru and consequently stopped the temporary job I’d been entitled to working tax credit while doing. I ended up really struggling financially but I don’t regret the trip the HMRC effectively caused me to have to pay back with money that I would have been entitled to as it would have been taxed at 20% if it had been paid correctly.

There isn’t a penalty for a pay rise or increase in business / pay the tax, pay back anything you find you aren’t entitled to and there is no issue. As long as you complete the tax forms on time.

VAT has nothing to do with being a limited company or not, as it applies to both. With profits over £50k it’s definitely better to be limited

I’ve already submitted one, some of us accountants are quick workers!

Over £100k you start losing your personal allowance. You could google for a tax calculator and get a rough idea of what you'll owe, which you'll have to pay.

Then you need an accountant who does what you pay him for