Home Business VAT Registration In The UK: A Crisp Guide For 2021

VAT Registration In The UK: A Crisp Guide For 2021

8 min read

VAT is an intimidating aspect of running a small business. With all the confusing documents and complicated HRMC’s rules, it is okay to feel lost. In this guide, we aim to help you understand VAT and how it affects your business. It is a crisp guide that will walk you through all the core aspects of the UK vat registration process.

What is VAT UK?

VAT is an abbreviation used for Value Added Tax and it is applicable on all the goods and services sold in the UK. The VAT law in the UK was introduced in 1973 and is governed by the HM Revenue and Customs (HMRC).

In the UK, EU VAT rules are applicable. The country is a core part of the EU single market economy. All the VAR directives are issued by the EU which are then applied to the participant countries including the UK.

If you are a business, you cannot charge VAT to your customers until and unless you are registered with the HRMC. Services and products on which you can charge VAT are known as Taxable sales or VATable Sales.

Thresholds for UK VAT Registration Process

It is important to understand the thresholds for the UK VAT registration process before you apply for a VAT certificate.

  • For businesses that have a VAT Taxable turnover of more than £85,000 in the past 12 months or if the turnover is expected to cross £85,000 in the next 30 days, it is mandatory to get VAT registered.
  • For businesses that indulge in distance selling into the UK, it is a must to get VAT certification if the VAT Taxable Turnover is more than £70,000.
  • When you are bringing goods into the UK from the EU you must get a VAT certificate if the VAT Taxable Turnover is more than £85,000.
  • There is the provision for Voluntary Registration for businesses with a turnover below £85,000. Such businesses must pay VAT on their registration date with the HMRC.

UK Vat Registration For Non-UK Residents

If you are a foreign company, you must understand the UK vat registration for overseas residents in detail. Any foreign company can register for VAT in the UK without forming a local company first. The process is known as non-resident VAT trading. If you are a foreign company supplying VAT taxable supplies in the UK, you must register for VAT as soon as possible. There is no UK VAT registration for non-UK residents’ threshold.

You can only take advantage of the distance selling threshold under which you need to register for the VAT certificate if your turnover exceeds £70,000 per annum.

UK VAT registration for non-UK residents as well as for local companies can be done without the aid of a local fiscal representative.

Some of the scenarios where UK VAT registration for overseas residents is mandatory includes:

  • When you are importing goods into the EU through the UK.
  • If you are buying and selling goods within the UK.
  • You are storing goods in a warehouse that is in the UK.
  • You are using the UK as the base location to sell goods to other EU countries.
  • When you are acquiring goods from other EU countries.

What Are The Documents Required To Register For VAT In The UK?

The list of documents for the UK VAT number application includes:

  • National Insurance (NI) number
  • Tax identifier i.e. Unique Taxpayer’s reference (UTR) number
  • Certificate of incorporation/incorporation details
  • Business bank accounts details
  • Information on all associated businesses within the last two years

Understanding UK VAT registration process

  1. Go to the Online portal of the Government of the UK.
  2. Proceed to create a new Government Gateway account.
  3. After sign-up, begin the registration process and follow the instructions.
  4. Fill in all the details and apply for VAT registration.
  5. You will get a VAT Registration Number after successful submission.

The details you provide at the time of sing up will be your Login & password. You will also have to verify your email address and other details. As soon as your VAT registration number is generated, you will get an email or SMS from the HM Revenue and Customs (HMRC).

When you have registered for VAT, you will get a VAT registration certificate (VAT4) which states your VAT registration number, the date of submitting the first VAT return and payments, and the effective date of VAT registration.

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