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VAT Registration
VAT Registration
Many UK business owners have questions about whether they need to register for VAT.
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As VAT experts, we are able to assist you with getting registered for VAT in the UK.
VAT Registration
How to Register for VAT
Many UK business owners have questions about whether they need to register for VAT. Normally, if a company does business in the UK and their sales have reached a certain threshold, it is necessary to register your company. The threshold does change each year to reflect the inflation rate.
Some common reasons why a company would register for VAT include:
Company makes purchases in Europe and these acquisitions exceed or will exceed the registration limit within the next 30 days
Registered business changes ownership
Company uses services or makes purchases from abroad
Company in the UK makes sales or provides services in Europe
As VAT experts, we are able to assist you with getting registered for VAT in the UK. After registering, we will monitor the registration process in the tax office.
Once your company is registered, we will become your agent and represent your company in the UK. In this capacity, we bear responsibility for all issues relating to your VAT.
VAT Support
Support for VAT-registered businesses
Companies that are VAT registered in the UK normally require a VAT specialist who can provide support and guidance any time it is needed. Our company provides a wide range of crucial services to businesses across the UK including:
We are the first point of contact for all VAT inspector calls
We send you reminders of any returns outstanding
We are responsible for VAT returns submissions
Our service works to ensure that output VAT payments are made on schedule
“Our company serves clients from every industry type helping them with Customs Duty and VAT consultant services in the UK. We are widely known as one of the UK’s largest and most comprehensive sources of VAT and Customs advice.”
Contact Us Today
We’ve been assisting businesses with complex VAT issues for many years.
Our website contains valuable information about how VAT works and who should register. If you still have questions or need help, our team is here to support you.
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VAT Basics
Understanding the basics of VAT
Explore the key information businesses need to understand about VAT registration, VAT returns, rates, invoices and reclaiming VAT.
01 What is VAT?
VAT (Value Added Tax) is a tax charged on most goods and services provided by VAT-registered businesses in the UK.
Some products or services are classed as VAT exempt or have reduced rates.
VAT is known as an “indirect tax” as VAT-registered businesses collect this on behalf of HMRC via the goods and services that they sell. They then complete VAT returns, usually quarterly, to pay this tax on to HMRC.
VAT is also paid by VAT-registered businesses on the products and services they purchase but many can then claim this payment back.
02 Does my business need to register for VAT?
All businesses whose turnover exceeds the annual VAT threshold (currently £85,000) are required to register for VAT and complete VAT returns.
Businesses can also choose to register for VAT voluntarily if their annual turnover is below the annual VAT threshold. For some companies, it can be more profitable to register for VAT.
Some businesses are exempt from paying VAT due to them exclusively dealing in VAT exempt products. This applies even if the business turnover is over the current threshold and they are not required to keep VAT records or submit VAT returns.
Some businesses are classed as partially exempt due to them selling a mixture of taxable and VAT exempt goods and/or services. This complex situation means that they must be VAT-registered, keep detailed records and submit VAT returns.
Businesses can also apply for de-registration if their annual turnover falls (current de-registration threshold is £83,000).
03 How does VAT work?
VAT-registered businesses are effectively unpaid tax collectors, charging VAT on the products they sell and paying this on to HMRC.
However, in many cases this can be financially beneficial for them and the process of registration is becoming simpler.
VAT paid by a business to its suppliers is known as Input Tax. This includes any essential items purchased, professional services or products bought to re-sell.
VAT charged by a business to its customers is known as Output Tax. This refers to the tax charged on the goods and services that a business supplies.
The amount a business is required to pay to HMRC or not will depend on how much VAT has been charged and how much has been paid.
For example, if you collect more VAT from your customers than you pay out to suppliers and service providers, then you will owe the surplus VAT money to HMRC. Conversely, if you pay out more VAT to your suppliers you can reclaim the money from HMRC.
04 Claiming back VAT
VAT-registered businesses are generally able to claim back VAT paid on purchases of goods and services for the business.
Reclaiming VAT is straightforward and completed when submitting a VAT return. Simply enter the total amount of VAT charged, and the total amount of VAT paid. If money is owed from HMRC, this amount is shown.
If purchased items also serve a private use, a business may only claim part of the VAT back. For example, a mobile phone that is used for both professional and private calls: if just 50% of the calls are business-related, only 50% of the VAT can be claimed back on the mobile phone contract.
To claim back VAT from any purchase, a valid VAT receipt is required as proof from the supplier.
A business may only claim back the VAT that applies to purchases for VAT taxable business purposes.
For example, you may not be able to reclaim VAT for:
Business entertaining
Goods and services used to make VAT-exempt supplies
Items purchased from an EU country
Business assets transferred as a going concern
Goods and services for private use
05 Filing Your VAT Return
VAT-registered businesses must submit a VAT return at regular intervals, usually quarterly.
This return should include your Output Tax or the VAT you have charged on sales to your customers during that period.
It should also include the Input Tax or the VAT you have paid on your purchases.
06 Current VAT Rates
VAT rates will vary depending on the types of goods and services provided. Currently, there are three rates:
Standard rate
The current standard rate of VAT in the UK is 20% which is applied to most goods, services, and purchases. Anything deemed a luxury item falls in this category too, which is why food products such as ice cream and confectionery use the standard rate.
Reduced rate
The reduced VAT rate applies to specific products. This reduced rate is currently 5% and applies to goods such as children’s car seats, domestic fuel, and power.
Zero Rate
The third VAT rate is the zero rate. This is a nominal VAT rate applying to most food products, books, newspapers, and children’s clothes.
Anything the UK government deems ‘essential’ typically falls into this category. Although the zero rate does not add any charge to products, companies must still record transactions involving these goods and services and report them on their VAT return.
07 Exempt goods and services
As well as these 3 rates there are also certain products that are categorised as VAT exempt.
No VAT is charged on exempt supplies, which covers services in sectors such as medicine, dentistry, education, finance and insurance.
Unlike zero rate items, exempt items do not need to be accounted for and no VAT can be reclaimed from HMRC on these goods.
08 Foreign currencies and VAT
Invoices for transactions in foreign currencies must show the total payable VAT in pounds sterling.
For any invoices written in a foreign language, you must retain an English translation of the invoice.
Conversion of the total payable VAT into sterling must be done via either the market selling rate at the time of supply, the rate used by the European Central Bank or HMRC’s period rates of exchange.
If any business wants to use an accounting method for foreign invoices which is not listed above, they will need to contact HMRC for permission.
09 VAT invoice requirements
There are three types of VAT invoice:
Full VAT invoice
These are used for most transactions by VAT-registered businesses. These must show the following:
Supplier’s name, address and VAT registration number
Name and address of the person receiving the supplied goods
Unique identification number
Date of issue
Date of supply
Description and quantity of the supplied goods or services
Price per item, excluding VAT
VAT rate charged per item
Discount per item, where applicable
Total excluding VAT
Total amount of VAT
Modified VAT invoice
Currently for retail supplies over £250, the modified VAT invoice must be used. It must include all the information listed for the full VAT invoice as well as the total amount, including VAT.
Simplified VAT invoice
Currently for any retail supplies totalling less than £250 a simplified VAT invoice can be used. Simplified invoices must only show:
Supplier’s name, address and VAT registration number
Unique identification number
Time of supply of the goods or services
Description of the supplied goods or services
VAT rate charged per item
Total amount including VAT
This number should be sequential and a different sequence per customer can be used as long as the series of invoices is unique.
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