Guide to Intending Trader Vat Registration in UK

An intending trader is a trader who applies for VAT registration before starting a business or making taxable supplies. A person can register himself as an intender trader but the person has to mandatorily satisfy HMRC that he is intending to start a business and has an intention to make taxable supplies in course of that business or in near future.

A person should satisfy following conditions –

1. He will make taxable supplies
2. He is intending to carry on a business and has an intention to make taxable supplies in the course of that business.

Once the condition of registration are satisfied, registration date can be date of application or from the agreed between individual and HMRC. More the evidence is produced of a genuine taxable business activity; early the HMRC will be satisfied. Some of the examples of the evidences are Lease agreement, Planning permission, signed contracts & purchase invoices.

In order to reclaim input tax incurred at the time of setting up & development of the business, intended trader generally wants registration from the earliest date when he started incurring expenses in relation to business set up. In some of the cases, amount involved may be significant and covers a long period of time.

In case a trader has not made any taxable supplies and wants to register as an intending trader, they should tell these two things to HMRC by filing the box 12 of form VAT 1 -

• Expected annual value of taxable supplies
• When you are starting the taxable supplies

Documentation for Intending Trader Vat Registration

Documentation is the most important part of intending trader application. More the documents in support of your application, more early the registration will be done. The documents needed to support an application for voluntary registration includes –

1. Business plan
2. Planning permission
3. Bank funding arrangements
4. Market research delegated to top business consultants.
5. Copies of contract in the pipeline
6. Architect’s drawing (in case of builder who has an intention to construct a dwelling)
7. Details of what has been brought for the business
8. Details of any patent sought
9. A statement with an option to tax certain land & buildings

How It Can Help Potential Businesses To Declare Vat?

VAT registration is one of the most important aspects of a business and every business should be VAT registered. VAT payments collected by the businesses are submitted to HMRC. HMRC made a provision for you to register for VAT as an “intending trader”. You can still apply for VAT registration even if you are not having taxable supplies for some time.

The concept of intending trader VAT registration helps potential businesses to declare VAT in the following ways –

• By introduction of this concept, more and more traders will come forward to join the league of VAT registered businesses as you can register your business under VAT before any tax supplies are made which results in more & more businesses will come forward and take this provision which leads to more and more VAT declarations.
• Intended trader VAT registration shows potential customers that the business is legitimate and the business owner is serious towards his business which influences more and more new businesses to come forward and follow the same path to make their goodwill before coming into business and results in more VAT declarations.
• Cancellation of VAT registration is also a reason that potential businesses will come forward and submit VAT details to HMRC. If they will not show the taxable supplies after doing VAT registration, there is a risk of cancellation of VAT registration.
• Some persons starting a new business apply for the VAT registration much before his first tax supply done or his intention to make taxable supplies in future. This simple process influences the trader to declare his VAT scenario to HMRC in future that how much tax he has to pay or how much VAT should reimburse for that period.
• The another reason for a intended trader to declare VAT to HMRC is to reclaim input tax incurred on buying of goods and services, setting up and developing their business.

About the author

Sumit Agarwal
Sumit Agarwal (ACMA ACA India), the Managing partner of dns accountants is a highly respected accountant with expertise in helping owner-managed businesses.