When and How to register for VAT

VAT - FRS part 1 (cropped) (cropped)
There are circumstances where you may choose to register for VAT. This blog covers the circumstances where you HAVE to register for VAT.

VAT threshold

You have to register for VAT if your VAT taxable turnover is more than £85,000. This includes everything that you sell that is not Exempt from VAT.  

IMPORTANT - Some of you may use Paypal, Izettle or Stripe (or a similar payment processing platform) to take client payments. These platforms deduct their fees from the payments they take and transfer the balance to you. When calculating what your taxable turnover is, it is important to use the amounts BEFORE these fees have been deducted.


When to apply for VAT registration if your taxable turnover is more than £85,000 in a rolling 12 month period

Let's say your VAT taxable turnover for the 12 month period from 1st March 2018 to 28th February 2019 is £85,001.

You have to register by 30th March 2019. This is 30 days from the end of the month, the need to register occurred.

You will need to start charging VAT from 1st April 2019.


When to apply for VAT registration if you expect to go over the threshold in a single 30 day period alone

Let's say you win a huge contract and expect to invoice £85,000 on 10th February 2019.

You have to register for VAT by 10th March 2019. This is 30 days from the date the expectation arose.

You will need to start charging VAT from 10th February, so you will need to add VAT to the £85,000 invoice you raise on 10th February.


What to do if your VAT taxable turnover goes over the registration threshold temporarily

HM Revenue & Customs (HMRC) may grant you an exception to register for VAT, as long as your VAT taxable turnover for the next 12 months isn't expected to go over the de-registration threshold of £83,000.

Example
  • Over the last three financial years your annual VAT taxable turnover is £80,000
  • You are comfortable with keeping it at this level
  • One of your customers has an additional requirement which takes your VAT taxable turnover to £86,000 but this is a one-off
  • You can write to HMRC to ask for an exception from registering for VAT
If you write to HMRC, you will need to explain why you believe your VAT taxable turnover won't go over £83,000 and provide evidence to support this belief.

If HMRC accepts your explanation, they will write to confirm this. If they don't they will register you for VAT.

How to register for VAT 

You can either register online using your HMRC online account or by post. You don't need to authorise an agent to register you for VAT.

Registration by post

You can use HMRC's VAT1 Application form to register for VAT. Once you receive your VAT certificate, you will need to register for VAT online via your Government Gateway account.

You will need 5 bits of information to register online. Numbers 1 to 3 will be shown on your VAT certificate:
  1. Your VAT registration number
  2. The postcode of your principal place of business
  3. Your effective date of registration
  4. The final month of the last VAT return you submitted (As you are a newly VAT registered business, enter N/A here)
  5. The 'Box 5' figure from the last VAT return you submitted (As you are a newly VAT registered business, enter 0.00 (zero) here)

Online registration
You can register using your HMRC online account. You just need to login and use their online form.


This blog summarises  when and how to apply for VAT registration. There is a vast amount of further information about VAT, as well as other areas of your business, on The Box.  All written in plain English and all in one place. 

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