Starting a business guide

How to register for VAT

VAT registration can look more complicated than it is. Here is what to check, what information to gather and how the registration process works.

Check whether you need to register

Compulsory VAT registration is based on taxable turnover, not accounting profit. The current registration threshold is £90,000. You must look at taxable turnover across the latest rolling 12 months rather than waiting for a financial year or tax year to end.

There is a second test: you must also register if you expect taxable turnover to go over £90,000 in the next 30 days alone. Taxable turnover broadly includes sales that are standard-rated, reduced-rated or zero-rated; exempt and out-of-scope supplies are treated differently.

You can usually register voluntarily below the threshold. That can be useful where customers can recover VAT or the business has significant VAT-bearing costs, but it also changes pricing, invoicing, records and return obligations. Consider the commercial effect before choosing a voluntary registration date.

Know your effective date

Your effective date of registration is the point from which the business must account for VAT on taxable sales, so it needs to be understood before invoices and prices are handled.

If the rolling 12-month test is breached, GOV.UK says you must register within 30 days of the end of the month in which you went over the threshold; the effective date is the first day of the second month after you went over. If you expect to exceed the threshold in the next 30 days alone, you must register by the end of that period and the effective date is the date you first realised this would happen.

Get the information ready

The information HMRC asks for depends on the legal structure. For a limited company, gather the core company and financial details before opening the application.

Individuals and partnerships are asked for a different set of identity and tax details, including a National Insurance number and identity document. Check the current GOV.UK list for the structure you are registering.

Limited-company checklist

Company registration number
Business bank account details
Unique Taxpayer Reference (UTR)
Annual turnover details
Estimated taxable turnover for the next 12 months
Relevant Self Assessment, Corporation Tax and PAYE information

Apply online

Most businesses register online. You sign in to the government service, or create sign-in details if you do not already have them, and work through the application for the relevant business type.

The application does not have to be completed in one sitting: GOV.UK says it can be saved and resumed. Some circumstances require extra forms or a postal VAT1 application, so follow the route the official service gives you rather than trying to reproduce the form elsewhere.

What happens after registration?

HMRC sends the VAT registration number, confirms the effective registration date and explains when the first VAT return and payment are due. The VAT number must be included on VAT invoices once it has been issued and the business is invoicing as VAT-registered.

HMRC currently signs newly registered businesses up for Making Tax Digital for VAT unless they are exempt or have applied for an exemption. That means keeping the required digital records and using compatible software to submit VAT returns.

Put these dates and details into the finance calendar

Nine-digit VAT registration number
Effective registration date
First VAT return period and filing date
First payment date
VAT invoice and digital-record requirements

Set your bookkeeping up properly

VAT registration creates an ongoing record-keeping routine. The books need to distinguish sales VAT and purchase VAT, retain supporting invoices and receipts, reconcile the relevant accounts and keep each VAT return period complete.

Get the setup right from the effective date. That makes the first return easier to prepare and gives the business a clearer view of how much collected VAT is waiting to be paid across to HMRC.

A VAT-ready bookkeeping routine covers

Sales invoices and VAT charged
Supplier invoices and recoverable VAT
Receipts and supporting records
Bank and VAT control-account reconciliations
Clear ownership of each VAT return period

SCALEHOUSE Bookkeeping: From £149/month

This guide provides general information. VAT treatment can depend on the nature of the business and its supplies, so use current HMRC guidance or obtain professional advice where appropriate.