When do you need to register for VAT with HM Revenue and Customs in the United Kingdom? This section explains about taxable turnover for small businesses and VAT registration thresholds.
VAT REGISTRATION: Find out how to register for Value Added Tax in the United Kingdom.
You need to register with HMRC if your company generates more than £85,000 of VAT taxable turnover.
VAT Registration is necessary for you to pay business sales tax.
HMRC will issue your business with a value-added tax registration certificate.
The certificate states three important pieces of information such as:
Note: You can choose to register for value-added tax status even if your company turnover is below the threshold. But you cannot register voluntarily if you only sell exempt items (e.g. educational materials). You will have some regulatory responsibilities after registering for VAT in the UK.
Starting from the effective date of registration, your requirements include:
Note: You can reclaim value-added tax paid on some items that you purchased before your registration date.
Before your VAT Registration comes through you cannot show Value Added Tax on your invoices. But you can increase the invoice amount to take account of the extra sales tax.
You should explain the reason for the increase to your clients. You can then issue a new invoice showing the unique number once you have your VAT Registration.
You will have to pay VAT to HMRC on invoices during this period, even if you did not increase the price.
As a rule, most companies use online registration. This applies for a partnership or a group of businesses using a single registration number.
Your Government Gateway account is your online account and registers your number. You use this account for your VAT Returns to HMRC.
Using an Authorised Agent
You can appoint an authorised agent to handle your sales tax returns and deal with the HMRC. The agent can be your accountant, a family member or a friend. If you do not have a Government Gateway account you can apply for an online account. Select the 'VAT submit returns' option if you choose this method.
Note: You can register you own VAT account. You do not need an authorised agent.
You are not eligible to apply online and must apply by post if you:
As a rule, your VAT Registration Certification gets issued within 14 working days. You will receive the certificate either by your Government Gateway account (online account) or by post.
The current VAT threshold is £85,000. You need to register if you exceed this, or expect to. Subtract exempt items from everything else you have sold to calculate VAT taxable turnover.
VAT Registration is compulsory when:
If you are not resident, or the business is not incorporated in the UK, there is no upper threshold. If you supply products in the UK, or intend to in the next 30 days, you must register.
VAT Registration may also be compulsory if you buy or take over a company that is already registered.
Late Value Added Tax Registration
If your company turnover exceeds the threshold in any 12 month period, you have 30 days to register. You are liable from the date you should have registered and not when you 'actually' register.
Note: Late registration can result in a financial penalty. The severity depends how late and how much you owe.
You can choose voluntary registration, even if your turnover is below the threshold. You are liable for payments from your registration date.
In some cases you can get a registration 'exception'. Generally, this occurs for a temporary increase in turnover above the threshold. You should write to HMRC for an exception. You cannot use an online account for this purpose.
You will need to supply evidence showing the turnover is not expected to exceed £83,000 for the next 12 months.
This amount is the de-registration threshold and not the registration threshold! HMRC will confirm their findings in writing. You will need to register for VAT if they reject your request.
VAT Registration: How and When Should You Register for VAT in the United Kingdom?