Essential Steps For A Successful VAT Registration Process

If you own a large business whose taxable turnover is over £85,000 a tax year, Value Added Tax (VAT) should be on your radar. The consumption tax is typically placed on products at every stage of the supply chain as long as there is value addition. This could be during the initial production or when a sale is made. 

Of course, like many other entrepreneurs, the idea of VAT or any other tax may not fascinate you. But registering and paying for it is good for business. After a few years, you can reclaim the VAT on all your purchases. Besides, a VAT registration number improves your corporate image and credibility, especially if you’re an international trader. 

In addition, it offers you a competitive advantage over non-registered companies, as many investors might not prefer working with them. Ready to register for VAT? These steps can guide you. 

Check If You’re Eligible 

While some businesses can register for VAT, others cannot. Find out the category where your enterprise belongs before getting your VAT registration from So, typically, if your annual taxable turnover exceeds the £85,000 threshold, VAT registration is mandatory. Without it, you can face fines and penalties, even if you register late. 

Additionally, you may opt for voluntary VAT registration if your annual taxable income is yet to hit £85,000. This allows you to enjoy the benefits registered companies get, including the ability to reclaim VAT. Should you change your mind, you can always cancel the registration within thirty days. 

Unfortunately, VAT registration is not an option if you only sell VAT-exempt products or services. These include insurance, education or training, finance and credit services, and subscriptions to various membership organizations. 

Otherwise, any business can register for VAT, including the following: 

  • Limited liability partnerships
  • Public limited companies 
  • Unlimited companies 
  • Sole traders 
  • Corporate groups 
  • Charity organizations and non-profits
  • General business partnerships 

Select a VAT Accounting Scheme 

When registering for VAT, you musto specify the VAT accounting scheme you want. HMRC usually uses it to determine whether you owe tax or are eligible for a refund. Your options include the following: 

1. Standard VAT Accounting Scheme

Most businesses use this VAT accounting scheme. With it, you must account for the VAT collected on all sales and the tax paid on every purchase. Then, for every quarter, HMRC requires you to submit a VAT return.  

A standard VAT accounting scheme suits businesses whose customers are prompt payers. If you often receive immediate payments from online sales or your shop, it’s also ideal for your enterprise. 

2. VAT Flat Rate Scheme 

VAT accounting can be tiresome. If you want to skip it, opt for a flat rate scheme. With it, you don’t need to calculate your bill. Instead, you can pay a certain percentage of your turnover as your VAT. 

Only VAT-registered companies are eligible for a flat rate scheme. Besides, your turnover must be less than £150,000 (minus VAT) to qualify. Again, note that this accounting scheme comes with a fixed rate for VAT. 

However, the specific amount you’ll pay will depend on your industry. Plus, you can’t reclaim VAT on your business purchases. 

3. Cash Accounting Scheme 

Under a cash accounting scheme, the VAT return is calculated based on the payment date on the invoice (not the date when the goods were billed). One of the drawbacks of this option is that the HMRC expects you to pay VAT on all sales, even when the customers haven’t paid you. 

Furthermore, only businesses with a turnover of  £1.35 million or less are eligible for this VAT accounting scheme. It’s also worth mentioning that you can only remain in it if your turnover doesn’t exceed  £1.6 million. 

Apart from these three VAT accounting schemes, others you can mull over include retail, margin, and annual accounting schemes. They all have different rules and eligibility conditions. Make sure to familiarize yourself with them before making your pick. 

Gather the Necessary Documents and Information

After deciding on the best VAT accounting scheme for your business, confirm you have the required details and documents. These include: 

  • Business’s bank information
  • Business registration number 
  • Annual turnover details 
  • National insurance number
  • Unique Taxpayer Reference (UTR)
  • Identification — passport or driving license 
  • Details of your Self Assessment return

Note that the information you’ll be required to provide may depend on the type of business you run. For instance, if you’re registering a partnership for VAT, your payslip information is necessary. 

Fill Out the VAT Application Form and Wait for Approval

Complete the application form once you have all the required details and documentation for VAT registration. You can do it online via the government website or your preferred company. 

After completing the VAT registration, wait for its verification and approval. It could take up to 30 business days, upon which you’ll receive your VAT certificate. Even so, this may take longer, depending on aspects such as whether you provided accurate details. 

Bottom Line

If you qualify for VAT registration, don’t hesitate to opt in. With VAT registration, you can easily engage in cross-border trade and rake in more profits. Again, customers may also deem your offerings more attractive than those of your non-VAT-registered competitors.  

So, after registering for VAT, add the tax to your product prices. You should also start issuing VAT invoices to your clients and pay your VAT on time. Keeping your digital VAT records is advisable, too, as they’re used to make up your tax returns. 

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