Whether your business is growing or you’re doing it voluntarily, registering for VAT is an essential part of running a business. In this guide, I’ll show you how to register for VAT online in 5 steps, what information you’ll need and which HMRC application forms you’ll need to complete as well as your legal responsibilities once you’re signed up.
Confused by VAT? Read this guide to understand exactly What is VAT and How it Works
Updated 28 July 2021
Table of contents
1. Who Needs to Register for VAT
Businesses with a taxable turnover of £85,000 or more must register for VAT***, which is why it represents a major milestone in your business. The VAT rules are the same for businesses regardless of their business structure. So, whether you are a Limited Company, self-employed or in a partnership you’ll be subject to the same HMRC registration, VAT thresholds and rules.
*** Businesses with VAT exempt sales are considered outside the scope of VAT so cannot register for VAT and are unable to claim back VAT on expenses.
2. When to Register for VAT
Unless you are registering voluntarily, a business must apply for a VAT registration when they’ve gone over the VAT threshold:
- Looking back 12 months (on a rolling basis) or;
- Intend to go over the VAT limit within the next 30 days.
3. Information You Need To Have Ready
Before you start applying for VAT, it’ll help to have the following information ready. What you’ll need will depend on your business structure:
If You’re Registered as Self-Employed
- Full name and date of birth
- National insurance number or UTR number of the person registering for VAT
- Contact details and those of the business
- The estimated value of the taxable turnover for the next 12 months
- Details of all associated businesses within the last 2 years
If You Have a Limited Company
- Company Registration Number (CRN)
- Date of incorporation
- National insurance number of the director who is registering the business for VAT
- Contact details and those of the business
- The estimated value of the taxable turnover for the next 12 months
- Details of all associated businesses within the last two years
4. How to Register for VAT Online
Registering for VAT online is simple enough to do yourself. Here are the 5 steps you need to complete:
- Visit the HMRC website and login or set up an online .GOV account;
- Choose the option to add a new tax to your account;
- Fill in the VAT application form with details about your business (see below for more guidance);
- Apply for the VAT schemes, if required;
- Complete the declaration, submit your form and wait for HMRC to approve your VAT application and issue a Vat Registration Number (VRN).
5. Completing Your VAT Application Form Online
As part of the VAT application process, you will be asked to provide information about you and your business. Some of the questions will be straight-forward to answer but others may be a bit more confusing so here is some more information on the questions that you may a little guidance on to answer:
5.1 Pre-Questionnaire
Before you start your VAT application, there are 6 questions to answer to ensure you are eligible to apply. You’ll need to answer all 6 before you can start registering.
1. Do you need to apply for a VAT registration exemption?
If your taxable turnover has only temporarily exceeded the VAT threshold, then you may be able to avoid registering for VAT with the agreement of HMRC by applying for a VAT exemption .
2. Are you joining the agricultural flat rate scheme?
People involved in the agricultural industry can apply for VAT slightly differently along with using a specialist VAT scheme.
3. Is your company part of a division?
You’ll need to let HMRC know if your business is part of another business.
4. Are you an EU business distance selling to the UK?
If you are a business based in the EU but not in the UK, registering for VAT under the rules of distance selling, then you’ll need to let HMRC know about this here. You’ll need to apply by post using a VAT1A form instead.
5. Have you acquired goods worth more than £85,000 from another EU company?
You’ll need to register for VAT using a form VAT1B if you answer yes to this question. You’ll need to apply by post using a VAT1B form instead.
6. Have you or are you planning to claim refunds under the 8th or 13th directive?
These directives cover VAT refunds incurred in other EU countries from around the world. You’ll need to apply by post using a VAT1C form.
5.2 Reason for Registering for VAT
Unless you are registering for VAT voluntarily, there are two main reasons for applying – either you have gone over the VAT limit in the previous 12 months or intend to go over it in the next 30 days. Let HMRC know why you are filling out the VAT application form here.
5.3 Choose a VAT Registration Date
HMRC will automatically suggest the date you should be VAT registered from the information you enter whether you are looking back. This is because you’ve already crossed the VAT threshold or looking forward because you’ll cross the limit in the next 30 days.
Alternatively, including if you are registering for VAT voluntarily, you can choose a date in the last 4 years, but that will make all historic sales liable for VAT. That being said, you’ll also be able to claim back VAT on expenses too to net off against taxable sales. This could be beneficial if you have been spending on a lot of expenses and have low or non-existent sales.
5.4 Choose a VAT Scheme
You’ll be able to join VAT schemes that may help improve cash flow and reduce administration as part of applying for your VAT number.
6. What Happens Next
Once you have successfully applied for VAT, you’ll receive a VAT number that means you’re officially registered for VAT. You’ll need to follow the rules of VAT which includes keeping VAT records, filing VAT returns (normally on a quarterly basis unless you’ve chosen to use the annual VAT scheme) and pay VAT to HMRC owed by the deadline applicable to you.
7. Contacting HMRC About Your VAT Application
If you have a question about your application or think you have made a mistake then you should call HMRC VAT Helpline on 0300 200 3700.
8. Key Takeaways
- Businesses with a taxable turnover of £85,000 or more must register for VAT unless they are VAT exempt;
- A business must register when their taxable turnover exceeds the threshold either in the last 12 months or in the next 30 days;
- You can register for VAT online and you’ll be issued with a VAT number once your application has been succesful;
- Once registered you’ll need to keep VAT records, work out the figures for your VAT return using an HMRC approved bookkeeping system such as Xero and submit your VAT return through your system directly to HMRC (this is known as making tax digital).
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