How to Register for VAT in the UK: Step-by-Step

Value Added Tax (VAT) is a consumption tax levied on most goods and services in the United Kingdom. Businesses registered for VAT act as tax collectors for His Majesty’s Revenue and Customs (HMRC), charging VAT on their sales (output tax) and generally reclaiming VAT paid on their purchases (input tax). Registering for VAT is a legal obligation for many businesses, providing the ability to reclaim VAT on business expenses.

Determining if Registration is Necessary

Businesses operating in the UK must register for VAT if their taxable turnover exceeds £90,000 within any rolling 12-month period (as of April 1, 2024). Taxable turnover includes the total value of all goods and services sold that are not VAT-exempt. Businesses must continuously monitor their turnover to determine if they have crossed or are about to cross this threshold.

If a business’s taxable turnover exceeds £90,000, it must register for VAT within 30 days of the end of the month in which the threshold was exceeded. The effective date of registration is typically the first day of the second month after the threshold was surpassed. Businesses must also register if they anticipate their taxable turnover will exceed the £90,000 threshold within the next 30 days alone.

Even if a business does not meet the mandatory threshold, voluntary VAT registration is an option for businesses that make taxable supplies. This can be beneficial, particularly if the business incurs significant VAT-able expenses, as it allows them to reclaim input VAT. Voluntary registration can also enhance a business’s credibility. For businesses primarily selling zero-rated goods, voluntary registration allows them to reclaim VAT on costs while not charging VAT on their sales.

For non-UK businesses, the rules for VAT registration differ. There is no registration threshold if they supply goods or services to the UK. If an overseas business sells goods stored in the UK to UK customers, it must register for VAT. For digital services supplied to UK consumers (B2C), the overseas provider is liable for UK VAT and must register. For business-to-business (B2B) digital services, the reverse charge mechanism often applies, shifting the VAT accounting responsibility to the UK business customer.

Preparing for VAT Registration

Before submitting a VAT registration application, gather all necessary information and documents. Businesses will need their legal name, trading name, business type (e.g., sole trader, partnership, limited company), and main business activity. Proof of business address, such as a utility bill or lease agreement, is required.

The following details are needed:
Personal details for the proprietor, partners, or directors, including their National Insurance number, date of birth, and contact information.
For limited companies, the company registration number, Companies House registration documents, and details of directors.
Bank account details for the business, including the bank’s name, sort code, and account number.
Historical turnover figures for the past 12 months and an estimate of taxable turnover for the next 12 months.
Details of any previous VAT registrations, including the VAT registration number, if applicable.
Information about any other businesses owned or run by the applicant.

Online VAT registration requires setting up a Government Gateway account, which serves as a secure access point to HMRC’s online services. If an account does not already exist, one can be created during the initial sign-in process on the HMRC website. This account will be used for submitting the VAT registration application and managing VAT affairs, such as filing returns.

Submitting Your VAT Registration Application

Once all necessary information has been gathered, the primary method for submitting a VAT registration application is through the HMRC online portal via a Government Gateway account. After logging into the Government Gateway, select “Add a tax, duty or scheme” and then choose “VAT and VAT Services” to begin the registration process. The online system guides the applicant through various screens.

While the online method is preferred for its efficiency, alternative submission methods exist. For instance, businesses can apply by post using form VAT1. However, postal applications have longer processing times. Regardless of the method, ensure all sections are completed accurately to avoid delays.

After the online application is submitted, HMRC processes VAT registration applications within 10 to 30 working days. Processing times can extend if the application is complex, incomplete, or requires additional checks. Upon successful submission, applicants receive a confirmation message or reference number, which should be retained.

Initial Steps After VAT Registration

Upon successful VAT registration, HMRC issues a VAT registration certificate, which includes the unique VAT number. This certificate is available within the online VAT account and may also be sent by post. The VAT number is an identifier that must be displayed on invoices and other official business documents when charging VAT to customers.

The effective date of registration is the date from which a business is legally required to charge VAT on its taxable supplies, even if the VAT number has not yet been received. Any invoices issued from this date forward should account for VAT, and businesses may need to reissue earlier invoices to include VAT once the number is confirmed.

VAT-registered businesses must comply with record-keeping requirements. This includes maintaining records of all sales and purchases, including zero-rated, reduced, and VAT-exempt items. Copies of all sales invoices issued and purchase invoices received must be kept for at least six years. Businesses must also keep a VAT account, which links their business records to their VAT returns. Many of these records must be kept digitally under the ‘Making Tax Digital for VAT’ rules, using compatible software.

The first VAT return period and its due date are specified on the VAT certificate. Most businesses submit VAT returns quarterly, with the return and payment due one month and seven days after the end of the VAT quarter. For example, if a VAT quarter ends on March 31, the return and payment are due by May 7. Submit VAT returns even if there is no VAT to pay or reclaim for a given period.