Beginner’s guide: how to get a UK VAT number?
By Camille Felappi
Are you trying to get a UK VAT number but have a hard time navigating the VAT requirements maze? UK VAT registration isn’t as overwhelming as it seems. However, you need a step-by-step approach to make sure you are compliant.
VAT registration implies more than getting a VAT number. You need to know not only how to register, but also how it will impact your business and customers. To help you do so, we compiled all the questions related to the UK VAT number you might have in one place. We will walk you through:
- What is a UK VAT number?
- When to get a UK VAT number?
- How to register for a VAT number in the UK?
- What are my obligations after I get a UK VAT number?
- What about UK VAT rates?
- Need help getting your UK VAT number?
Don’t want to handle UK VAT issues by yourself? Eurora can take care of your VAT registration and returns. Check our UK VAT Agent service!
What is a UK VAT number?
Most of us are familiar with VAT which stands for Value Added Tax. It is a consumption tax charged on most goods and services for both B2C and B2B markets. But fewer people are aware of what can be subject to VAT. VAT is charged on:
- Business sales: the goods or services you offer as a business
- Sale of business assets
- Items sold to staff: for example, canteen meal
UK VAT is managed by the HM Revenue & Customs (HMRC) independently since the UK left the EU single market and customs union. The HMRC provides to businesses a VAT number, which is a unique ID when they register for VAT. In the UK, VAT numbers are nine digits long and always have the prefix GB.
When to get a UK VAT number?
Before filling out any VAT application, you need to be sure when you need a UK VAT number. Depending on where your business is based and your revenue, different requirements apply.
For UK companies, the current threshold to register for VAT is set at £85,000. In other words, you must register when your VAT-taxable turnover exceeds £85,000 in 12 months. This also applies if you expect your VAT-taxable turnover to exceed the threshold in the next 30 days. If your business doesn’t reach this threshold, you are not obliged to get a UK VAT number. However, it is possible to register for VAT voluntarily. Now you might ask yourself why a company would go through VAT bureaucracy if it is not required. It is still an option you could consider as it can offer some benefits. For example, you will be able to reclaim VAT on goods and services that your company purchases. It also facilitates deals with other VAT-registered businesses.
If your business is not based in the UK, there is no granted threshold. You must register for UK VAT as soon as you supply goods and services to the UK, or if you expect to in the next 30 days. Before Brexit, non-UK companies could benefit from a £70,000 distance selling threshold. However, after the introduction of new trade rules, this threshold has been abolished.
How to register for a VAT number in the UK?
Ready to register for a UK VAT number? Before you start, here is a checklist of the documents you will need:
- National Insurance number or tax identifier
- Certificate of incorporation/incorporation details
- Details of all associated businesses within the last two years
- Business bank account details
- Details of the business that has been transferred if appropriate
Once you gathered these documents, you can pick one of the options offered by HMRC to get your UK VAT number. The easiest way to get a UK VAT number is to apply online on HMRC’s website. You will need to create a VAT online account, which is often referred to as a “Government Gateway Account”. This is the account you will also use to submit your company’s VAT returns to HMRC later. You should receive your certificate and VAT number within 30 days on your VAT online account.
You can also choose to appoint an agent or an accountant. They will be able to register your company for UK VAT, submit your VAT Returns, and deal with HMRC on your behalf.
In some cases, you will need to register by post. This applies if:
- You need to apply for a registration exception
- You’re registering several divisions or business units under different VAT numbers
- You’re joining the Agricultural Flat Rate Scheme
In this case, you will need to register using the VAT1 form which is available for download on HMRC’s website. After you sent your application, the HMRC should send your VAT certificate within 30 days. You will then be able to create a VAT online account.
What are my obligations after I get a UK VAT number?
When you receive your UK VAT number, it doesn’t mean that you can kick back and relax. This will instead lead you to several VAT responsibilities. They will be effective from your date of registration HMRC establishes them. Once you get your UK VAT number, you must:
- Add VAT to your prices
- Issue valid VAT invoices to your customers. Different requirements apply, depending on the type of invoice. You can check the full list of requirements on Gov.uk.
- Submit your VAT return. You will need to submit your VAT return online every quarter, even if you don’t have VAT to pay or reclaim.
- Keep digital VAT records and a VAT account
It is legitimate to ask yourself why the HMRC requires all this paperwork. The main goal behind these requirements is to ensure that the amount of VAT you charge and pay balance out. If you paid more than needed, you will get this money back when you file your return. If you paid less, however, this will be considered a fraud and you can face legal sanctions.
What about UK VAT rates?
As we saw, having a UK VAT number leads to more responsibilities than one could expect. To get off to a good start, you need to make sure you collect the right VAT amount from your clients.
The UK applies 3 types of VAT rates depending on the type of goods and services:
- Standard rate: it is currently 20% and it applies to most goods and services
- Reduced rate: it is currently 5% and it is charged on a few goods like sanitary products or children’s car seats
- Zero rate: When a zero rate applies, it means that the goods are VAT-taxable but the rate of VAT you must charge is 0%. You still have to record them in your VAT accounts and report them on your VAT Return. This applies for example to books, newspapers, or motorcycle helmets
Need help getting your UK VAT number?
Do you feel you won’t be able to go through these processes without help? We understand that. Registering for UK VAT and handling your UK VAT returns on your own can be overwhelming. And even more if the UK isn’t your only market.
That’s why it makes sense to appoint an agent like Eurora to register your company and deal with HMRC on your behalf. We developed a VAT Agent Service that helps non-UK businesses deal with UK VAT registration and returns. To benefit from our UK Agent Service, you will need to be a non-UK business and sell goods with a value of £135 or less in the UK.
Our UK Agent Service offers a wide range of benefits from VAT registration to representation with the HMRC. Eurora will also take care of your tax return submissions and help you with all the required tax payments. We make sure you are 100% compliant with all the UK tax regulations.
Want to speed up your VAT registration and focus on your business? Register for UK VAT with Eurora!