Registering your business for VAT is a legal obligation when your VAT taxable turnover reaches the threshold. You can register for VAT before this point if you wish, and there are many benefits as to why you might choose to do so. Getting VAT registration right is hugely important, and the team at Paramount Company Formations can assist you through each and every step.
We’ve summarised a number of key questions regarding registering for VAT, VAT registered companies and the VAT registration service as a whole. If you have any further questions about how to register for VAT, or whether it would be beneficial to do so if your company is currently below the VAT registration threshold, please don’t hesitate to get in touch.
How To Register For VAT
You can register for VAT either online or by post – and there is no charge for doing so. When registering online, you’ll be creating a VAT online account, sometimes known as a ‘Government Gateway account’. You will need to provide details about your business including your turnover, business activity and bank details, for example.
Most businesses are able to register online, but if the following exclusions apply to your business, you will need to register by post:
- you want to apply for a ‘registration exception’
- you’re an EU business
- you import goods from another EU country
- you’re joining the Agricultural Flat Rate Scheme
- you’re registering the divisions or business units of a body corporate under separate VAT numbers
- you’re disposing of assets on which 8th or 13th Directive refunds have been claimed
Your registration date is known as your ‘effective date of registration’ and you’ll have to pay HMRC any VAT due from this date. You should get a VAT registration certificate within 14 working days, and this will be sent either by post, or to your VAT online account – depending on whether or not your initially registered online. You’ll also be issued a VAT number, which you can display on your invoices, website and letterheads.
To simplify the process of VAT registration further, you could choose work with Paramount Company Formations. We can deal with HMRC on your behalf and ensure every box is checked correctly.
When Do I Need To Register My Business For VAT?
You MUST register for VAT if your VAT taxable turnover is more than £85,000 in a 12-month period. Note that £85,000 is the current threshold and has been since 2017, but may change in 2024 so ensure you keep track of this. This might sound like a lot, but ‘taxable turnover’ refers to the overall income generated from all sales, not just the profit from those sales. The figure of £85,000 is known as the ‘threshold’. You must also register for VAT if you expect to go over the threshold within a 30-day period. This is a legal requirement.
There’s no threshold if your business isn’t based in the UK, but 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).
What Are The Benefits Of Registering My Business For VAT?
There are a number of benefits for registering your business for VAT, and these are especially useful to know if you’re considering registering before your company reaches the legal threshold of £85,000. These benefits can be both monetary and otherwise.
Monetary benefits include the following:
- VAT registered companies can reclaim VAT that has been paid on any business purchases.
- VAT registered companies can also charge VAT on products and services.
- Registering for VAT voluntarily before your sales have reached £85,000 will help you avoid incurring penalties if you don't notice when they do reach £85,000
There are a number of other benefits for registering for VAT which you might not have considered. Being a VAT registered company can give the impression of a larger and well-established company – as the threshold is well-known. This in turn can increase trust and loyalty amongst your customers and suppliers. Both of these benefits could be extremely valuable if you are a new business just starting out and should therefore be carefully considered.
If you have any questions about registering your business voluntarily, we will be happy to advise you.
What Kind Of VAT Schemes Are Available?
There are two types of VAT scheme, the “Standard” VAT scheme and the “Flat Rate” VAT Scheme. The “Flat Rate” VAT scheme is considered a simpler alternative, but it could also have some financial benefits too.
The “Standard” VAT scheme
You must account for all the input and output VAT you receive or pay out. Each quarter, you calculate how much VAT you must pay to HMRC.
The “Flat Rate” VAT scheme
You apply a fixed percentage to your turnover each year, and pay this sum to HMRC, rather than calculating the input and output VAT on each transaction you make.
If you are unsure of which scheme you should be applying for, you can ask Paramount Company Formations for advice. With the “Flat Rate” VAT scheme, the flat rate percentage varies depending on the business sector you are in. This could have a financial benefit for your business, unless you’re making a large amount of purchases, and we would be happy to offer our expert advice in helping you to make that decision.
Can I Register For VAT Voluntarily?
If your sales have reached £85,000 in the last twelve months, you must register for VAT. However, you can register for VAT voluntarily before then if you wish. Read ‘What are the benefits of registering for VAT’ above for more information.
It’s also worth noting that voluntary registration can be backdated by up to four years if you are able to supply evidence to the HMRC.
Can I Avoid Registering For VAT If I Believe My Company Is Going To Dip Below The VAT Threshold In The Future?
If your business has crossed the VAT registration threshold but you believe this will just be temporary, it is possible to avoid registering. This is called an ‘exemption’, and you can apply for a registration ‘exception’ if your taxable turnover goes over the threshold temporarily.
To apply for an ‘exemption’ you must write to HMRC with evidence showing why you believe your VAT taxable turnover won’t go over the threshold of £85,000 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.
How Can I Check If A Company Is VAT Registered?
VAT-registered companies are given a VAT number, which can be displayed on invoices, letterheads and their website, to name but a few places. If this isn’t clearly displayed, you can ask and they should easily be able to supply their VAT number to you. This will be a 9 digit number (not including the GB at the beginning).
The next step would be to check that this number is correct. You can call the HMRC helpline, who will be able to confirm this for you. The VAT Helpline number is: 0845 010 9000 open 8.00 am to 8.00 pm Monday to Friday.
For any more questions about VAT registration, which scheme to apply for, or whether your business could benefit from registering voluntarily, please don’t hesitate to get in touch.