Wondering how to register for VAT in the UK? Keep reading to learn about your options.
Who Needs To Register For VAT?
If your business sells products that feature value-added tax (VAT) (i.e., hot food, alcoholic drinks, sports drinks, etc.) you must forward the VAT amount to HMRC.
However, you only have to become a VAT-registered business if you reach the VAT threshold. The current threshold for mandatory VAT registration is £85,000. So, if your company’s annual taxable turnover exceeds £85,000, you must register for VAT.
Some enterprises with net sales below £85,000 sign up to become VAT businesses through voluntary registration. There are some benefits of being VAT registered; it makes it easier to trade internationally, for example. It also means you can reclaim VAT paid for international purchases.
There is no VAT registration cost.
Registering For VAT: The Essentials
Before you register for VAT, make sure you have access to the following:
- Your tax reference number
- Your national insurance number
- Your main contact details
- Your bank account details
- Records of companies you’ve previously owned (over the previous two years)
- Documentation of your annual turnover for your current business
- Information on the nature of your business
To register for VAT on the HMRC portal, you’ll also need a Government Gateway account and ID. This ID consists of 12 digits, which you will receive upon signing up for a Government Gateway account.
How To Register For VAT Online
The first step in registering for VAT online is to visit the HMRC services page. You can either sign in here using your Government Gateway ID, or sign up for an account if you don’t already have one.
Once logged in, go to “Your HMRC Services,” and click on “Register for HMRC Taxes.”
Go through the pages and fill out the details as requested.
Can You Register For VAT Via Post?
Yes, it is possible to register for VAT through post, but you must meet specific requirements.
You must be:
- Applying for the Agricultural Flat Rate Scheme or a registration exception;
- Or applying for VAT for several different businesses.
If either of the above applies, you can download and print the VAT1 form.
Once it has been completed, it must be sent to HMRC.
Different VAT Schemes You Can Apply For
While completing your VAT registration, you’ll notice that there are several VAT schemes to choose from. These include:
Annual Accounting VAT Scheme
Instead of paying VAT monthly or quarterly, you may sign up for the Annual Accounting VAT scheme, meaning you only have to pay VAT once per year.
When you sign up for this scheme, you pay VAT for the year in advance. The amount you pay is based on your VAT return from the previous year. New VAT-registered businesses will be given an estimate. As stated in this Annual Accounting document, you will be reimbursed if your estimated VAT return was too high.
This scheme is beneficial for small businesses struggling to make monthly VAT payments.
VAT Flat Rate Scheme
Through this scheme, your business pays a flat rate for VAT, instead of calculating VAT for each transaction. This makes it easier for companies experiencing a high number of transactions. Such a level of transactions can cause serious strain on the administrative side of the business.
However, you cannot reclaim VAT on purchases with this VAT accounting method. Instead, an allowance is deducted from the flat rate to cover purchases.
VAT Cash Accounting Scheme
Instead of paying invoices, you only have to pay VAT when you’ve received it. This can be beneficial if you have long payment terms with your customers.
What Happens After You Complete A VAT Registration?
Once you complete the VAT registration process, you’ll receive your VAT certificate. This normally arrives within 30 days and includes your VAT registration number and information about your first VAT return.
Registering for VAT is a simple process. Once you pass the VAT threshold, you can either register your business online or via post (if you meet the requirements). Once you receive your VAT certificate and VAT number, all that is necessary is to keep on top of your VAT and HMRC payments.