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Registering for VAT for the first time

VAT

You must register for VAT with Hm Revenue and Customs (HMRC) if your business’ VAT taxable turnover is more than £85,000.

When you register, you’ll be sent a VAT registration certificate.

This confirms:

  • Your VAT number
  • When to submit your first VAT Return and payment
  • Your ‘effective date of registration’ - this is the date you went over the threshold, or the date you asked to register if it was voluntary

You can register voluntarily if your turnover is less than £85,000, unless everything you sell is exempt.

You’ll have certain responsibilities if you register for VAT.

Your VAT Responsibilities

From the effective date of registration you must:

  • Charge the right amount of VAT
  • Pay any VAT due to HMRC
  • Submit VAT Returns
  • Keep VAT records and a VAT account

You can also reclaim the VAT you’ve paid on certain purchases made before you registered.

You can’t charge or show VAT on your invoices until you get your VAT number. However, you’ll still have to pay the VAT to HMRC for this period.

You should increase your prices to allow for this and tell your customers why. Once you’ve got your VAT number you can then reissue the invoices showing the VAT.

How To Register

Most businesses can register online - including partnerships and a group of companies registering under one VAT number.

https://online.hmrc.gov.uk/registration/newbusiness/business-allowed

By doing this you’ll register for VAT and create a VAT online account (sometimes known as a ‘Government Gateway account’). You need this to submit your VAT Returns to Hm Revenue and Customs (HMRC).

Using An Agent

You can appoint an accountant (or agent) to submit your VAT Returns and deal with HMRC on your behalf.

When you receive your VAT number from HMRC, you can sign up for a VAT online account (select option ‘VAT submit returns’).

When You Can’T Register Online

You must register by post using VAT1 if:

Register by post using form:

  • VAT1A if you’re an Eu business ‘distance selling’ to the Uk
  • VAT1B if you import (‘acquire’) goods worth more than £85,000 from another Eu country
  • VAT1C if you’re disposing of assets on which 8th or 13th Directive refunds have been claimed

When you receive your VAT number from HMRC, you can sign up for a VAT online account (select option ‘VAT submit returns’).

Getting Your Certificate

You should get a VAT registration certificate within 30 working days, though it can take longer.

It’s sent either:

  • To your VAT online account
  • By post - if an agent registers you or you can’t register online

What You Need To Know

You need to provide details like your turnover, business activity and bank details.

Your registration date is known as your ‘effective date of registration’. You’ll have to pay HMRC any VAT due from this date.

You don’t need to authorise an agent to register you for VAT.

When To Register

You must register when you go over the threshold, or know that you will. The threshold is based on your VAT taxable turnover - the total of everything sold that isn’t VAT exempt.

Compulsory Registration

You must register for VAT if:

  • Your VAT taxable turnover is more than £85,000 (the ‘threshold’) in a 12 month period
  • You expect to go over the threshold in a single 30 day period

You’ll also need to register if you only sell goods or services that are exempt from VAT or ‘out of scope’ but you buy goods for more than £85,000 from Eu VAT-registered suppliers to use in your business.

You may have to register for VAT if you take over a business that’s already registered.

Businesses Outside The Uk

There’s no threshold if neither you nor your business is based in the Uk. You must register as soon as you supply any goods and services to the Uk (or if you expect to in the next 30 days).

Late Registration

You must register within 30 days of your business turnover exceeding the threshold. If you register late, you must pay what you owe from when you should have registered.

You may get a penalty depending on how much you owe and how late your registration is.

Voluntary Registration

You can register voluntarily if your business turnover is below £85,000. You must pay HMRC any VAT you owe from the date they register you.

Get An Exception

You can apply for a registration ‘exception’ if your taxable turnover goes over the threshold temporarily.

Write to HMRC with evidence showing why you believe your VAT taxable turnover won’t go over the de-registration threshold of £83,000 in the next 12 months.

HMRC will consider your exception and write confirming if you get one. If not, they’ll register you for VAT.

Calculate VAT Taxable Turnover

VAT taxable turnover is the total value of everything you sell that isn’t exempt from VAT.

You must register for VAT with Hm Revenue and Customs (HMRC) if it goes over the current registration threshold in a rolling 12-month period. This isn’t a fixed period like the tax year or the calendar year - it could be any period, for example the start of June to the end of May.

The current threshold is £85,000. It usually goes up on 1 April each year. There are different thresholds for buying and selling from other Eu countries.

What To Include

To check if you’ve gone over the threshold in any 12-month period, add together the total value of your Uk sales that aren’t VAT exempt, including:

Include any zero-rated items - only exclude VAT-exempt sales, and goods or services you supply outside of the Uk.

If You’Re Over The Threshold

You must register for VAT - though HMRC may allow you ‘exception from registration’ if your turnover goes above the threshold temporarily.

You must register straight away if you expect the value of everything you sell in the Uk which isn’t VAT-exempt in the next 30 days alone to be over £85,000.

You should check your rolling turnover regularly if you’re close to going over the threshold.

Check historical information about VAT thresholds if you think you should have been registered in previous tax years.

Purchases Made Before Registration

There’s a time limit for backdating claims for VAT paid before registration. From your date of registration the time limit is:

  • 4 years for goods you still have, or that were used to make other goods you still have
  • 6 months for services

You can only reclaim VAT on purchases for the business now registered for VAT. They must relate to your ‘business purpose’. This means they must relate to VAT taxable goods or services that you supply.

You should reclaim them on your first VAT Return (add them to your Box 4 figure) and keep records including:

  • invoices and receipts
  • a description and purchase dates
  • information about how they relate to your business now