VAT registration

Overview

You must register for VAT with HM Revenue and Customs (HMRC) if your business’ VAT taxable turnover is more than £82,000. You can register voluntarily if it’s below this, unless everything you sell is exempt.

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

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.

While you wait

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

Register for VAT

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

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 if:

• you want to apply for a ‘registration exception’
• you’re an EU business ‘distance selling’ to the UK
• you import (‘acquire’) 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

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 14 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 £82,000 (the ‘threshold’) in a 12 month period
• you receive goods in the UK from the EU worth more than £82,000
• you expect to go over the threshold in a single 30 day period

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).

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

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.

Voluntary registration

You can register voluntarily if your business turnover is below £82,000. 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 £80,000 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.

Registering for VAT in other EU countries

Usually, you only need to register for VAT where you’re based.

But if you’re supplying digital services to consumers based in other EU countries, you must either:

• register for VAT in each country where you’re supplying digital services
• sign up for the VAT MOSS service

Digital services

Digital services include things like broadcasting, telecommunications services, video on demand, downloadable music, games, apps, software and ebooks.

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, eg the start of June to the end of May.

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:

• goods you hired or loaned to customers
• business goods used for personal reasons
• goods you bartered, part-exchanged or gave as gifts
• services you received from businesses in other countries that you had to ‘reverse charge’
• building work over £100,000 your business did for itself

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

Thresholds for previous tax years

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

Changes to your details

You must keep your VAT registration details up to date. You can change your details:

• online - through your VAT online account
• by post - using form VAT484

You must send form VAT2 to the VAT Registration Service to report any changes to a partnership.

Some changes can affect your VAT registration or mean you have to cancel it.

When to tell HMRC

You need to tell HM Revenue and Customs (HMRC) about any changes to the following within 30 days or you could face a financial penalty:

• the name, trading name or main address of your business
• the accountant or agent who deals with your VAT
• the members of a partnership, or the name or home address of any of the partners

Changing bank details

You must tell HMRC at least 14 days in advance if you’re changing your bank details.

You’ll also have to tell your bank to change your Direct Debit details if you pay your VAT by Direct Debit, but you shouldn’t do this within 5 banking days before or after your VAT return is due.

You must write to the Annual Accounting Registration Unit to change your Direct Debit details if you use the Annual Accounting Scheme. Include your registration number.

Death and illness

You must tell HMRC within 21 days if you take on the VAT responsibilities of someone who has died or is ill.

You can only do this by sending form VAT484 in the post, including details of the date of death or the date the illness started.

Cancel registration

You must cancel your registration if you’re no longer eligible to be VAT registered. For example:

• you stop trading or making VAT taxable supplies
• you join a VAT group

You can ask HM Revenue and Customs (HMRC) to cancel your registration if your VAT taxable turnover falls below the de-registration threshold of £80,000.

How to cancel

You can apply to cancel your VAT registration:

• online - through your VAT online account
• by post - using form VAT7

You must do this within 30 days of your reason for cancelling the registration or you may be charged a penalty.

What happens next

It usually takes 3 weeks for HMRC to confirm your de-registration and the official de-registration date. This is either the date when the reason for your cancellation took effect (eg when you stopped trading), or the date you asked to de-register if it’s voluntary.

HMRC will send confirmation to your VAT online account (or through the post if you don’t apply online). From the date of de-registration you must stop charging VAT and keep your VAT records for 6 years.

VAT after you cancel

You’ll have to submit a final VAT Return for the period up to and including the de-registration date. You must account for any stock and other assets you have on this date if:

• you could reclaim VAT when you bought them
• the total VAT due on these assets is over £1,000

Don’t wait until you’ve received all your invoices before submitting your final return. You’ll still be able to reclaim VAT on anything you bought for your business while still registered once you get the invoices.

Transfer registration

You can transfer a VAT registration from one business to another. For example, if you take over a company and want to keep using its VAT number.

You can apply to transfer a VAT registration:

• online - through your VAT online account
• by post - using form VAT68

What happens next

It usually takes 3 weeks for HMRC to confirm the transfer.

If necessary:

• the seller should cancel their accountant’s access to their VAT online account - eg if they had authorised them to deal with their VAT
• the seller must give their records to the buyer if they’re passing on their VAT number
• the buyer should contact HMRC within 21 days of the transfer application if they want to keep the seller’s accountant
• the buyer should replace any self-billing arrangements with new ones
• the buyer may have to register for VAT from the day the business is transferred