K VAT registration becomes compulsory once taxable turnover passes ninety thousand pounds in any rolling twelve-month period. Not a tax year — any twelve consecutive months, measured from wherever you are standing today.
For a studio selling custom software, that is a smaller number than it sounds. It is a handful of good projects. It is one decent year, or two thirds of a very good one.
Thethresholdisnottheproblem.Crossingitwithoutnoticingistheproblem.
Cross it unnoticed and twenty percent is owed on money that has already been banked and, in a small business, already spent — plus penalties, plus the awkward conversation with every client who was told in writing that you were not VAT registered.
Because registration is not a checkbox. It is an application, a waiting period, a number, new invoice templates, changes to how payments are collected, and a genuine commercial decision about whether your prices absorb the twenty percent or rise by it. None of that is a thing you want to start on the day you have already crossed.
And it is silent below that line, deliberately. A permanent “nothing to do” bar on a dashboard is a bar people stop seeing, which means it is invisible on the one day it changes. A warning that is only ever there when it means something is a warning that gets read.
Ours measures payments received. That is the conservative reading and it is also the data that exists — money that actually arrived. An accountant may prefer the invoice-date basis, which would show the threshold being crossed sooner, because it counts work billed rather than work paid for.
We have written that down rather than resolved it, because it is genuinely an accountant's call and not a developer's. The warning light is right on either basis. The exact number behind it deserves one conversation with somebody qualified, which is precisely the conversation this is designed to start early enough to have calmly.