Understanding VAT (Value Added Tax) is crucial for any limited company operating in the UK. This guide covers everything you need to know about VAT registration, requirements, thresholds, and deadlines, helping you navigate the complexities of VAT returns.

What is a VAT Number?

A VAT number is a unique identifier assigned to businesses by HM Revenue and Customs (HMRC) once they register for VAT. This number is essential for tracking VAT payments and claims. For businesses, having a VAT number allows you to charge VAT on your products or services and reclaim VAT on purchases.

How to Register for a VAT Number

Registering for a VAT number involves several steps:

  1. Determine Eligibility: Not all businesses need to register for VAT. You must register if your VAT-taxable turnover exceeds the current VAT registration threshold, which is £90,000 as of 2024. If your turnover is below this threshold, you can opt for voluntary VAT registration.
  2. Apply Online: The quickest way to register is online through the HMRC website. You’ll need to create a Government Gateway account if you don’t already have one.
  3. Provide Necessary Information: During the registration process, you’ll need to supply details about your business, including your turnover, business activities, and bank account information.
  4. Receive Your VAT Number: After submitting your application, HMRC will review it and send your VAT registration number by post. This usually takes around 14 working days.

Variations and Requirements

Different types of VAT registration cater to various business needs:

  • Standard Registration: Mandatory for businesses with a turnover above the threshold.
  • Voluntary Registration: Available for businesses below the threshold that want to reclaim VAT on purchases and improve their business credibility.
  • Group Registration: Allows a group of companies under common control to register as a single entity.
  • Joint Ventures: Two or more businesses working together on a specific project can register jointly.

VAT Registration Thresholds

The VAT registration threshold is the amount of revenue a business can earn before it must register for VAT. As of 2024, the threshold is £90,000. This threshold is reviewed annually and may change.

For self-employed individuals and sole traders, the threshold is the same. However, voluntary registration is an option if they want to manage VAT more efficiently.

Filing VAT Returns

Once registered, you must file VAT returns either quarterly, monthly or annually, detailing the VAT you’ve charged and the VAT you’ve paid on purchases. The process is part of the Making Tax Digital (MTD) initiative, requiring businesses to keep digital records and submit returns using compatible software.

Deadlines and Legal Requirements

  • Quarterly Returns: VAT returns are typically filed every three months. Each return must be submitted and any VAT owed must be paid within one month and seven days after the end of the VAT period.
  • Annual Accounting Scheme: Small businesses can opt for this scheme, allowing them to make advance payments towards their annual VAT bill.
  • Making Tax Digital: As of April 2019, all VAT-registered businesses with a turnover above the VAT threshold must follow MTD rules.

Consequences of Non-Compliance

Failing to register for VAT when required or missing VAT return deadlines can result in penalties from HMRC. It’s essential to stay compliant to avoid fines and interest on late payments.

Registering for VAT and managing VAT returns might seem daunting, but understanding the requirements and processes can make it manageable. Sandwell Accountancy Services Ltd is here to assist you with all aspects of VAT registration and filing, ensuring your business remains compliant and efficiently manages its VAT obligations.

Call us today to set up an appointment to discuss your VAT obligations.
Get in touch on 01384 569 197.