How to get a VAT number

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Do I need to register for VAT?

All businesses need to be aware of the VAT threshold, which is currently set at £85,000 in the UK. If your business has an annual turnover that exceeds the VAT threshold then you must register for VAT within 30 days. If you fail to do this, you could incur a considerable fine.

You must ensure that you keep up to date with the VAT threshold figure as it can change each financial year.  The VAT threshold figure is also based on a rolling 12 months at a given point, rather than the turnover for the calendar year.

Once you have registered for VAT, you will receive a unique VAT number. This is vital as you will need to quote this on any business invoice or receipt where VAT is added to goods and services.

Why do I need to register my business for VAT?

  1. To stay within the law and avoid a fine
  2. If your input tax (the VAT you pay) is more than your output tax (the VAT you collect from customers), you can claim the difference back from HMRC
  3. You can claim back any VAT that you are charged when you pay for business-related goods and services
  4. Once past the VAT threshold you won’t have to worry about whether you are just below it or above it. You can relax and focus on growing your business

Which VAT scheme should I use?

It’s wise to check out the various VAT schemes available to see which is most suitable for your business.

Consider:

  • An Annual Accounting scheme – if your businesses has a turnover below £1.35 million you can make advance payments throughout the year which can help your business cash flow
  • The Flat Rate scheme – this can be beneficial if your business turnover is less than £150,000
  • A Cash Accounting scheme – ideal for businesses whose turnover is below £1.35 million. You only need to pay HMRC the VAT income you receive during a quarter

What you’ll need to register for VAT

You can register for VAT online, but in some cases you will need to complete a paper form.

Before you register you will need:

  • Your unique taxpayer’s reference or National Insurance (NI) number
  • Your business bank account details
  • Your company number
  • Your registered company address
  • Information on any associated businesses from the past two years
  • Information on any businesses being transferred or purchased, if this applies

After you have registered for VAT, you will receive a VAT registration certificate which will display:

  1. Your VAT number
  2. The date of your VAT registration
  3. The date you need to submit your first VAT return and payment

How to reclaim VAT

It is possible to reclaim the VAT on purchases made prior to VAT registration once you have your VAT number. You will need the invoices and the VAT will be the amount of VAT on the invoices, not the date reclaimed.

You can reclaim VAT on services if:

  • These services are applicable going forward once you are registered for VAT
  • They were professional fees for financial, tax or legal advice
  • Those services were for your VAT taxable business uses

You can reclaim VAT on goods if:

  • These goods are applicable going forward once you are registered for VAT
  • You still store these same goods
  • Those goods were for VAT taxable business use

For expert financial advice or to obtain a quote for business insurance, get in touch and we will be happy to advise you.