VAT Registration - FAQ
- Do I need to be VAT registered?
- How long does it take to get a VAT Registration Number?
- What Information will I need to supply?
- Are there any additional fees or ongoing costs?
- How can I calculate and file my VAT returns?
- I don't live in the UK, can I still become VAT registered?
- Can I charge VAT before being registered?
- Can I reclaim VAT before being registered?
- What is the VAT Registration certificate?
- What is the difference between cash and invoice accounting for VAT?
- What is the Flat Rate VAT scheme?
- What is the Annual Accounting VAT scheme?
- Who can I contact if I have any problems with my application?
Do I need to be VAT registered?
You can register for VAT at anytime as a sole trader, partnership or Limited Company. If however your sales turnover exceeds £82,000 (2016 threshold), or is predicted to do so in the near future then it will become mandatory to register for VAT.
How long does it take to get a VAT Registration Number?
We typically quote 7 days for turnaround on obtaining a VAT registration number. This however is an average and may vary depending on your circumstances and completeness of the information supplied. All decisions are taken by HMRC on an individual case-by-case basis, we will always endeavour to resolve any issues that may arise in the most timely and efficient manner.
What Information will I need to supply?
The information you will need to supply to complete the VAT registration process will depend on the trading status of the business you are registering for VAT. In most cases the following information will be required.
- Contact details, date of birth and nationality of the company director or sole proprietor
- Business contact details
- Nature of the business conducted
- Projected annual value of VATable supplies
- Bank details of the entity being registered for VAT
In most cases there will be no requirement to provide any original ID documents, however in cases where it is difficult to verify the identity of a business owner we may request scanned ID documents that will prove your identity and residential address.
Are there any additional fees or ongoing costs?
There are no renewal or maintenance fees once you are VAT registered. The price we charge includes the full registration process and receipt of a VAT number. Once you are VAT registered you may want to look at an accounting package to help you produce your VAT invoices, calculate your VAT and file your VAT returns, you can find out more about this in the next section.
How can I calculate and file my VAT returns?
Fortunately there are many great online accounting applications that will allow you to produce professional looking VAT invoices and automatically calculate your VAT on a monthly, quarterly or annual basis. Our sister company "QuickFile" provide a full accounting platform that enables you to create professional looking VAT invoices, log all your VATable purchase invoices and calculate your final VAT liability. You can even file your VAT returns electronically to HMRC.
I don't live in the UK, can I still become VAT registered?
For those not resident in the UK, it may be easier to form a Limited Company first and obtain banking facilities in the name of the company before registering for VAT. If you are unsure of your eligibility please do not hesitate to contact us.
Can I charge VAT before being registered?
You cannot charge VAT on your sales until you have received your VAT Registration certificate. The VAT registration certificate will show the "effective date" from which HMRC will consider you registered for VAT. If your effective date of registration pre-dates any sales you have made without VAT you will need to reissue them.
Can I reclaim VAT before being registered?
There are certain provisions that allow VAT to be reclaimed on certain capital expenditure before you are VAT Registered. The current rules (2016) allow you to claim for 4 years on goods (still in use in the business) and 6 months for services. You must have the original VAT receipt and the claim must be made on your first VAT return.
What is the VAT Registration certificate?
When your VAT registration has been accepted, you will be issued with a VAT Certificate. This is an official acknowledgement from HMRC that the business is registered for VAT. The VAT Certificate will state the following:
- Your VAT Registration Number (VRN)
- The effective date from which you are VAT registered
- The issue date of the certificate
- The schedule for filing VAT returns (e.g. quarterly, annually etc)
- Your bank details
- Your trade classification (SIC Code)
When you receive your VAT Registration certificate be sure to check over the details and report any inaccurate information to HMRC.
What is the difference between cash and invoice accounting for VAT?
There are two fundamental methods for accounting for VAT in your business, these are known as "cash accounting" and "invoice or accrual accounting".
Let's start with cash accounting as this is the most popular option for smaller businesses. Using the cash accounting method, you always assume VAT is collected and accounted for at the point an invoice is paid. Conversely any VAT on invoices you receive from your suppliers can only be reclaimed once those invoices are paid.
On invoice accounting your VAT liability will arise at the point the invoice is raised (not paid) and the same applies for reclaiming VAT on invoices received from your suppliers.
Cash accounting is advantageous for those businesses that have a more restricted cashflow, the VAT is pegged against payments made or received ensuring that the cash is always there to cover any liability. This is why the cash accounting method is preferable amongst smaller businesses who typically operate within smaller cashflow margins.
What is the Flat Rate VAT scheme?
The Flat Rate VAT scheme is a method of VAT accounting that allows you to pay a smaller percentage of VAT to HMRC (e.g. 10-14%) rather than the full standard rate (20% as of 2016). The condition to this arrangement is that in the most part the business will not be able to reclaim any VAT on the purchases made. There are however certain exceptions to this on capital expenditure over a certain threshold.
This scheme is ideal if you typically accrue more VAT on sales than on your purchases.
What is the Annual Accounting VAT scheme?
The Annual VAT Accounting scheme is designed for smaller businesses that are looking to reduce red-tape by consolidating all VAT reporting into a single annual VAT return. Under these scheme you will still be asked to pay an estimated sum of VAT on a monthly or quarterly basis. When the VAT return is filed at the end of the accounting year any adjustments are factored with any over or under payment balanced with HMRC.
Who can I contact if I have any problems with my application?
We are always here to help, if you have any questions or problems with your VAT application please do not hesitate to contact us. We always recommend you seek professional advice from a qualified accountant before becoming VAT registered and on deciding the appropriate VAT scheme on which to enroll. --Latest--