When do you need to register for VAT?

Oct 31, 2022 | Business, Tax

Business tax is tough enough to stay on top of without having to worry about when you need to register for VAT. Here’s what you need to be aware of. 

What is the threshold? What happens if you know you’re about to reach it any day now? And what about if you’re an overseas business? Forget the Government website with all its jargon; everything you need to know can be found right here.


When to register for VAT

You must register for VAT if your total VAT taxable turnover for the last 12 months was over £85,000. This is known as the VAT threshold. 

If that applies to you, you must register within 30 days of the end of the month when you went over the threshold. Your date of registration will be the first day of the second month after you go over the threshold.

You must also register if you expect your turnover to go over the VAT threshold in the next 30 days.

You have to register by the end of the 30-day period. Your effective date of registration is the date you realised you went over the threshold – not the date your turnover actually went over it .

Regardless of turnover, you also have to register if all the following are true: 

  • you’re based outside the UK
  • your business is based outside the UK
  • you supply any goods or services to the UK (or expect to in the next 30 days).

If you’re unsure if this applies to you, you can read the guidance on non-established-taxable-persons, or send us a quick message.

If you register for VAT late, you must pay VAT on any sales you’ve made since the date you should have registered. You may also need to pay a penalty, depending on how much you owe and how late your registration is.

If you go over the threshold temporarily, you can apply for a registration exception by writing to HMRC with evidence that shows why you believe your VAT taxable turnover will not exceed £83,000 in the next 12 months.

However, you can choose to register for VAT if your turnover is less than £85,000, which is known as ‘voluntary registration’. If you do this, you must pay HMRC any VAT you owe from the date they register you.


How to calculate your turnover for VAT

Your turnover is the total value of everything you sell that is not exempt from VAT. It also includes:


How to register for VAT

You can usually register for VAT online, which involves creating a VAT online account, sometimes called a Government Gateway account. You need this to submit your VAT returns to HMRC.

You can appoint an accountant to submit your VAT returns and deal with HMRC online. 

Once you’re registered, you’ll receive a nine-digit VAT number which you must include on all invoices you raise, information about when to submit your first VAT return and payment, and confirmation of your registration date.

You can start charging and reclaiming VAT from your registration date.

If you need help with any stage in registering for VAT, check out how  our tax team can help.

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