VAT REGISTRATION NUMBER

Businesses must register with HMRC for Value added tax (VAT) if the VAT taxable income is greater than £83,000. The business receives a VAT registration certificate when they register with HMRC. The certificate confirms the VAT number, details for submission on first VAT return and payment, and effective date of registration. The effective date is when the business crossed the threshold and felt that they need to register for VAT. Business can register voluntarily if the turnover is less that £83,000, except the lot being sold is exempt. The VAT registration certificate can be received within 14 working days, nevertheless it can take longer. The certificate is sent either to the VAT online account or by post if it’s not an online registration or through a third party.

VAT Registration - Why Should I Register for VAT

Necessary registration – Do I need to register for VAT?

Business needs to register for Value added tax if:

  • Taxable VAT turnover is greater than £83,000 in a 12 month period
  • Goods are received in the United Kingdom from the European Union and the value is more than £83,000
  • The business anticipates that it will cross the threshold in a straight 30 day timeline

There is no threshold for businesses based outside the United Kingdom. But the business must immediately register for VAT if they have supplied any goods or services in the United Kingdom or anticipate doing so within the next 30 days. It may also be required to register for VAT if a business has been taken over.

Delayed registration

If a business does not register within time, it is liable to pay a penalty depending on how much the business owes and the duration of late registration. As stated earlier, it is imperative for the business to register within 30 days of the business turnover crossing the threshold.

If the taxable turnover of the business goes over the threshold provisionally, the business can apply for a registration exception. A written application needs to be sent to the HMRC with facts showing why the threshold will not be crossed in the next 12 months. If the HMRC is convinced with the written application, they will send a written confirmation else, the business will need to register for Value added tax.

VAT responsibilities for a business

From the effective date of VAT registration business must:

  • charge the correct VAT amount on the invoice
  • timely file VAT Returns
  • regularly clear all VAT dues to HMRC
  • maintain VAT records

Until a business has a VAT number, it cannot charge or illustrate VAT on the invoices. However, the business is liable to pay the Value added tax for this period to HMRC. In such a scenario, the prices of the goods and services will increase and the customers should be informed about the same. Once the VAT number is obtained, the business can re-issue the invoice to the customer reflecting the VAT amount separately.

HMRC VAT REGISTRATION

Almost all businesses can register for VAT online. Even partnerships and group of companies can register under one VAT number. Once the business is registered online and has VAT online account, it will need to submit VAT returns to HMRC as and when they are due. Businesses can even appoint accountants like DNS Accountants or agents to help them submit the VAT returns on time, meeting all deadlines, and interact with HMRC on the behalf of the business. In-case the business cannot register online, it can register by post if

  • The business wants to apply for a ‘registration exception
  • It is an European Union business selling in the United Kingdom
  • The business is becoming a part of the Agricultural flat rate scheme
  • A business unit or division is to registered under a different VAT number
  • The business is disposing assets for which 8th or 13th Directive refunds will be claimed

As an industry, farming receives a lot of VAT refunds. The industry’s direct purchases are more often than not zero-rated and so are their sales. However, any VAT the industry incurs on extra expenses such as equipments or overheads can be claimed as refunds. Other businesses that may want to register for VAT voluntarily can include a child shoe shop or green grocers. Yet again, sales and direct purchases of these stores are generally zero-rated, however, if any expenses, legal fees or equipment, they ought to recover any VAT charged on these purchases.

VAT THRESHOLD COMPUTATION

The VAT taxable income is the total value of goods and services sold that aren’t exempt for VAT. The current threshold is £83,000 and it typically is revised on 1 April each year. Businesses must register with HMRC for VAT in a 12 month rolling period. To cross-check if the business has exceeded the threshold in any 12-month period, the business can add the total invoice value of all UK sales that aren’t exempt. This may include:

  • goods take into service or leased to customers
  • company merchandise used for personal reasons
  • goods exchanged, or given as gifts
  • services received from businesses in countries that had to ‘reverse charge

VAT REGISTRATION CHECK – How long it takes to get a VAT registration number?

Usually, the HMRC takes a month to process the VAT applications, but it can take longer if the HMRC needs to carry out further checks. The government of United Kingdom claims that it can even take as less as 14 working days to process the claim. HMRC intends to process 70% of the applications within 10 business days and most are processed within 30 days. From the time of applying for VAT registration and getting the VAT registration number, the business must keep account of and pay all VAT dues. The business becomes liable to keep records of all the invoices from the time it voluntarily registration for VAT. It actually does not matter when the business applied for registration or the date the VAT registration number was received. Business can reclaim any VAT paid on the purchases from the date of registration. To do so, records of all inwards invoice from the suppliers needs to be maintained.

Vat registration form

The VAT registration form can be accessed by clicking here.

DIFFERENT VAT RATES

Different items have different implications.

Name

Current rate

Narrative

Standard

20%

The standard value added tax rate is the default tax rate. This rate is charged on almost all goods and services in the United Kingdom, if not acknowledged as being zero-rated or reduced

Reduced

5%

Items that fall under this category are children’s care seat, installation of energy-saving materials, sanitary hygiene products, and domestic fuel and power, etc.

Zero

0%

Items that fall under this category are public transport, books and newspapers, food (not restaurant meals or takeaways), children’s shoes and clothes etc.

Exempt

Not applicable

The law specifies that exempt items are free from VAT charges. Examples include fundraising, providing credit, insurance, education, membership, etc.

Outside the scope

Not applicable

No VAT is applicable of items that are totally outside of the United Kingdom’s VAT system

Vat registration contact number

  • Telephone: 0300 200 3700
  • Outside UK: +44 2920 501 261
  • Text-phone: 0300 200 3719

Taxpayers can call the department for any help regarding common VAT enquiry. Taxpayers must have their VAT registration number and postcode with them. Tax cannot be paid over the phone.

YOUR ACCOUNTING PARTNER – DNS ACCOUNTANTS

DNS Accountants is a trusted brand and has years of knowledge in the accounting and taxation domain. The firm has been helping businesses with VAT registration and other VAT related queries. The team at DNS comprises of learned taxation professionals and ACA’s or Chartered Accountants (CA). The firm focuses a lot of customer service & believes in delivering unmatched client service. DNS Accountants offers:

  • services at a nominal rate
  • best-in-class accounting and tax planning services
  • VAT registration and taxation advice

Other services

DNS Accountants offers accounting, financial records management, taxes & self assessment services to owner-managed-businesses or self employed individuals. For business owners and freelancers / contractors, it is difficult to keep pace with the ever changing government regulations and rules and DNS takes responsibility of all the taxation and accounting needs of the business.



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