How to Register for VAT in the UK: A Step-by-Step Guide for Growing Businesses

As your business grows, navigating VAT registration becomes essential. This guide will break down the key points to help you understand when, why, and how to register for VAT, ensuring you’re compliant and prepared.

How to Register for VAT in the UK: A Step-by-Step Guide for Growing Businesses

What is VAT?

VAT, or Value-Added Tax, is a consumption tax applied to most goods and services in the UK once a business reaches an inevitable turnover. The VAT rates vary—20%, 5%, or 0%—based on the type of goods or services offered.

When Do You Need to Register for VAT?

You must register for VAT if:

• Your VAT-taxable turnover exceeds £90,000 in the last 12 months.
• You expect your turnover to surpass £90,000 within 30 days.
• You operate outside the UK but conduct business within it, regardless of turnover.

How to Register for VAT

The process differs slightly for limited companies and sole traders or partnerships.

For Limited Companies:

• Documentation Needed: Your company registration number, business bank account details, Unique Taxpayer Reference (UTR), and annual turnover.
• Additional Information: Your Self-Assessment, Corporation Tax, and PAYE information.

For Sole Traders or Partnerships:

• Documentation Needed: National Insurance number, identity document, bank account details, Unique Taxpayer Reference (if applicable), annual turnover.
• Additional Information: Self-Assessment returns, payslips, and P60.

Regardless of your business structure, you’ll need a Government Gateway ID and password to register online.

Registering for VAT by Post

If online registration isn’t an option, you can register by post using a VAT1 form. Reasons might include health, age, religious grounds, or lack of internet access. After HMRC approves your request, they’ll send the form, which you can complete and return by mail.

Support with VAT Registration

VAT registration and returns can be complex, especially when managing expenses, calculating returns, and filing on time. Many businesses work with an accountant to streamline the process and ensure they’re taking advantage of any possible tax savings.

Waiting for Your VAT Number

Once registered, HMRC will provide a nine-digit VAT number, which you’ll add to all future invoices. While you wait for this, HMRC advises preparing your accounting records to make any necessary adjustments. Most businesses increase their prices by the VAT rate, though some may choose to absorb the cost, impacting profit margins.

Penalties for Late Registration

Failing to register on time can result in a “failure to notify” penalty 30 days after surpassing the VAT threshold. Penalties vary, and if HMRC suspects intentional non-compliance, there may be closer monitoring of your accounts or even criminal charges.

VAT Deregistration

If your turnover falls below £88,000, you may deregister from VAT, removing the VAT charge from your goods and services. This threshold flexibility helps small businesses avoid frequent registrations and de-registrations due to minor fluctuations.

Final Thoughts

VAT registration is a vital compliance measure for UK businesses, ensuring you remain aligned with regulatory requirements as you grow. Staying aware of your turnover levels helps you know when to register and, if necessary, deregister. Need help managing VAT registration, returns, or any other accounting services? Reach out to our team for expert guidance and support. Avail Registration of VAT Services in the UK with Accelus.