In theory VAT should be fairly straightforward, but in reality it frequently causes confusion over who needs to be registered and what can be claimed. Quite simply VAT is a tax that is charged by VAT-registered businesses on most goods and services. Generally speaking, when a VAT-registered business is charged VAT when it buys goods or services, it can reclaim the VAT. Basically, these businesses are acting like tax collectors - charging VAT, collecting the money and, minus VAT they've incurred, handing it over to HMRC.
Businesses have to register for VAT when their taxable turnover for any 12-month period exceeds the VAT registration threshold, which is currently £77,000. However, if the business will only go over the threshold temprarily an exception can be requested from HMRC.
Also, if a business takes over another business that is already VAT registered then it will be required to register. This is based on the assumption that the joint income of the businesses will be over the threshold.
While these are the main reasons for compulsory registration, there are others. For example, if you think your business’ turnover will exceed the threshold within just 30 days or if you are trading outside of the UK.
NOTE: There are late registration penalties and/or failure to notify penalties along with surcharges and interest for late payment.
Outsourcing is without doubt a great way to grow your business and work more efficiently using expertise not necessarily available within your business. However, as is the way, you do need to be careful about the implications of outsourcing when it come to HMRC. You might think the person is a subcontractor, but HMRC might look at them as an employee and therefore expect you to pay their tax and National Insurance. Or if you are a limited company working for someone it could be you that becomes liable in the eyes of the taxman.
Although you know that you're running a successful company do you sometimes feel that the size of your business is holding you back? The truth is that some customers will have less confidence in your ability than your larger competitors, but the good news is that there are lots of simple and cost effective ways you can create the impression that you are a much bigger business than you really are.
Unfortunately record keeping isn't the most fascinating area of running your own business, but it's a very important one nonetheless. You cannot underestimate the negative effects of poor record keeping on your business including paying excess 
The financial side of running a business can be very scary to those just starting out. Entrepreneurs coming from the security of an employer who sorted all the tax and national insurance are often daunted by the prospect of taking on these tasks. This is an important topic, which any business owner must take very seriously.
So Vince Cable, the Business Secretary no less, has been fined £500 for not registering for VAT on his freelance income which, according to The Sun, was between £127,000 - £192,000 in 2009 -2010. So, the man known for campaigning against tax evasion has himself now been found to have evaded tax, although Mr Cable's aides have said it was not done intentionally and was reported by his personal accountants as soon as it was found.