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How to Register for UK VAT

November 21, 2022

In this article, we will be reviewing general guidelines for UK VAT for both local UK businesses as well as cross-border traders.

When it comes to local UK businesses, the VAT registration process is not particularly complicated and in most cases the turnaround is quick. This however is not the case for overseas businesses conducting cross-border trading. Although submitting a UK VAT Registration application is fairly straightforward, the process itself and getting a positive result is far from easy. In recent years the time taken to complete registration has greatly increased due to additional document requests, proofs of purchases, proofs of sales, proofs of shipping, identity checks, and more, as well as HMRC processing time.

 

However, in most cases, if you provide the correct documentation and the application form is filled in the correct manner. The processing time will be reduced and the application success rate will increase.

In order to get a VAT number, you must register for VAT, which entails additional steps. It's important to understand not just the registration process but also how it will affect your company and its customers.

We have therefore divided this article into the following topics:

  • What is UK VAT?

  • When are you required to register for UK VAT?

  • What are the UK VAT rates?

  • How to register for UK VAT

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What is UK VAT?

The United Kingdom’s Value Added Tax Act 1994 defines VAT as "a tax on the supply of goods or services."

The acronym VAT, which stands for Value-Added Tax, is well-known. It is a consumption tax imposed on the majority of B2C and B2B products and services. However, fewer individuals are aware of which items are liable to VAT. VAT is assessed on:

  • Products or services you sell for your company.

  • Sale of company assets

  • Items sold to employees, such as canteen meals

  • Commissions

Since the United Kingdom exited the EU single market and customs union, HM Revenue & Customs (HMRC) manages UK VAT separately. Upon registering for VAT, the HMRC gives companies a VAT number, which is a unique identifier. In the United Kingdom, VAT numbers consist of nine digits plus the prefix GB.

When are you required to register for a UK VAT Number?

Before submitting a VAT application, you must determine if you need a UK VAT number. Depending on the location of your business and its income, certain rules apply.

The current VAT registration threshold for UK businesses is £85,000. In other words, if your VAT-taxable annual turnover surpasses £85,000, you will need to register for a VAT number.
This also applies if you anticipate that your VAT-taxable turnover will surpass the threshold within 30 days. If your company falls below this limit, you are not required to get a UK VAT number.

However, voluntary VAT registration is feasible. Now you may wonder why a business would undergo VAT bureaucracy if it is not necessary. Still, you should consider registering for a UK VAT number since it could offer some advantages. For instance, you will be able to recover VAT on company-purchased products and services. It also enables transactions with other firms registered for VAT.

If your business is registered outside of the United Kingdom and you are providing the taxable sale of goods to consumers in the United Kingdom, you may be required to register for VAT. Once example of such activity would be if you are using the amazon marketplace and have your products shipped by amazon FBA. In this case, as your goods are stored in an amazon FBA warehouse in the United Kingdom, you are required to register for VAT. Furthermore, to import goods into the United Kingdom you will also require an EORI number.

If you are not sure whether you should register, please contact us for a free consultation.
If you would like to read more about the latest HMRC guidelines, please visit the official HMRC website.

What are the UK VAT Rates?

As we have shown, having a UK VAT number entails more obligations than one might assume. To get off to a good start, you must collect the correct amount of VAT from your customers.

The United Kingdom uses three distinct VAT rates based on the nature of the products and services:

  • Standard Rate: The current standard rate is 20% and applies to the vast majority of products and services.

  • Reduced Rate: A few items, such as feminine hygiene products and children's car seats, are subject to a reduced tax rate of 5%.

  • Zero Rate: Zero rate means that the items are VAT-taxable, but you must charge a 0% VAT rate. You must still record these transactions in your VAT accounts and declare them on your VAT return. This is applicable to items such as books, newspapers, and motorcycle helmets.

How to Register for UK VAT

If you need help registering for UK VAT or are unsure whether you need to register for UK VAT, please contact us for a free consultation.

 

Registering for UK VAT can take 2-3 months from the point of time all documents are collected and a VAT number has been issued. Therefore, it is very important that before we commence with the registration process, you gather the following documentation.

 

  • Certificate of Incorporation

  • Directors Passport Copy

  • Recent Company Utility bill / Bank Statement

  • Screenshot of Amazon Store

 

Additional documents may be requested in some cases by HMRC, so it is good to have these ready just in case to avoid any further delays.

 

  • Proof of Sales in the UK (client invoice)

  • Proof of Goods Purchase (supplier invoice)

  • Proof of Shipping Goods into the UK (logistics documents)

 

In some cases, HMRC may perform further identity checks and request the following documents in addition.

 

  • Birth Certificate

  • Mortgage Statement

  • Lease / Rent Agreement

​Please contact us if you have any questions; we will be happy to assist.

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