VAT: when your business crosses the line
VAT is not only for large companies. There is a turnover threshold, a filing date that does not move, and a penalty for filing nothing at all.
Most owners assume VAT is somebody else’s problem until an invoice comes back queried. It is worth knowing where the line sits before a customer asks you for a VAT invoice you cannot issue.
The threshold
A taxable turnover of 25 million naira in a calendar year brings you into VAT. Below it you are not required to register or charge, and above it you are, from the point you cross rather than the following year.
The filing date
Returns are due by the 21st of the month following the one being reported. A return for March is due on 21 April. The date does not shift for weekends or public holidays, so treat the working day before as your real deadline.
Join thousands of SMEs to get insights
Weekly updates from the business and corporate world. The things that actually concern your business.
Filing nil is still filing
A month with no taxable supplies still needs a return. A nil return is a return. Filing nothing is what attracts the penalty, and it accrues monthly, so a year of silence is twelve penalties rather than one.
What to keep
Every invoice you issued, with VAT shown separately
Every invoice you paid that carried VAT, for input claims
Your filing receipts, because the burden of proof is yours
Input VAT you cannot evidence is input VAT you cannot claim, which is the most common way a business ends up paying more than it owed.
