How do I register for VAT

How do I register for VAT

How do I register for VAT?

You must register for VAT if your annual sales are £90,000 or above, and you may be able to voluntarily register even if your sales are under £90,000. Voluntary registration for service-based companies could be beneficial if you are invoicing companies abroad since your sales would usually not be vatable. You could reclaim VAT on relevant expenses and claim a VAT refund from HMRC.

 

VAT is managed online, and it is straightforward to set up. The easiest way to do it is to first set yourself up for HMRC online services. If you have a HMRC gateway account already, you can register for VAT via the gateway. You should not create a second HMRC gateway.

 

If you are not sure if VAT registration is suitable for your business, then you can read more information here or contact your accountant to discuss this further.

 

My customer is asking for my VAT number/VAT invoice

While awaiting registration and if asked for a VAT number, the standard response would be, 'I am currently awaiting my VAT number and will supply it as soon as it is issued; sorry for any inconvenience'. It is standard practice to send an invoice but to state that a 'vat number has been applied for'. The invoice amount could include vat, i.e. if the amount you invoice is £1,000 per week, £1,200 should be invoiced but not broken down into VAT. VAT registration should typically be within a couple of weeks. Once you have received your VAT number, you can update your invoices and send complete VAT invoices to your customers.

 

Alternatively, while waiting to receive your VAT number, you can issue invoices excluding VAT. When you have received your VAT number, you can raise 'VAT only' invoice/s to your customers for invoices raised since your effective date for registration.

 

Filing quarterly returns

When you are registered for VAT, you will need to make a quarterly VAT return every quarter until you de-register, even if you have no sales. When you received notification of your VAT registration, you will have been advised of your return dates: Jan, Apr, Jul, Oct or Feb, May, Aug, Nov etc. Depending on your reporting dates, your first return may not be for an entire quarter. HMRC will arrange the quarters so that they coincide with your year-end. You have a month to submit your VAT return and pay over the outstanding VAT after your quarter end. HMRC refunds of VAT may take longer.

  

Your accounting software (we recommend Freeagent) will calculate the figures for your VAT return. If you want to check your numbers on your first VAT return, we will be happy to look at it for you, or we can manage your VAT for a small additional charge. 

 

Paying VAT

Please check this link for more information on how to pay a VAT liability to HMRC.

 

Flat Rate Scheme

There are several VAT schemes that you may find simpler to operate and may well be beneficial. The key one you should consider is the flat rate scheme, which is popular with contractors, and you only pay the VAT on sales and do not reclaim VAT on expenses. For more information on the Flat Rate Scheme, please see here.

 

Can I avoid VAT registration by splitting my company in two?

This is generally considered as tax avoidance by HMRC and you can read more about this here.


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