How to register a limited company for VAT

Do you have to register, or are you choosing to?

A limited company must register if its taxable turnover for the last 12 months goes over £90,000, or if it expects turnover in the next 30 days alone to go over £90,000. Below that, registering is voluntary. The application is the same either way. What changes is the date VAT starts.

A company can also apply before it starts making taxable sales. VAT Notice 700/1 says you may only register if you are in business, and HMRC may ask you to show that you plan to make taxable supplies.

Source: Register for VAT

What information does HMRC ask for?

For a limited company, GOV.UK says you need the company registration number, the business bank account details, the company's Unique Taxpayer Reference (UTR), details of annual turnover and an estimate of taxable turnover for the next 12 months. You will also need information about the company's Corporation Tax, PAYE and Self Assessment.

Gather these before you start:

• The company registration number, as shown on the Companies House register.
• The company's 10-digit Corporation Tax UTR. If it has not arrived or has been lost, request the company UTR first.
• The business bank account name, sort code and account number.
• Annual turnover figures, and an estimate of taxable turnover for the 12 months from the registration date. VAT Notice 700/1 says you can use the previous 12 months as a starting point.
• Information about the company's Corporation Tax, PAYE and Self Assessment, which the online service asks for.
• Any extra details for your type of business. GOV.UK says some businesses fill in extra forms during the online application, depending on their type.

Source: Register for VAT: How to register for VAT

Registering online, through an agent or by post

You can usually register online. You sign in to HMRC's service, and if you do not already have sign in details you can create them the first time. You do not have to finish in one go: you can save your entry and go back to it later.

An agent, such as an accountant, can make the application through their agent portal. VAT Notice 700/1 says the company is still responsible for providing accurate information. GOV.UK also says you can appoint an agent to send your VAT Returns and deal with HMRC for you.

GOV.UK says you must register by post on form VAT1 instead if:

• you are applying for a registration exception because taxable turnover went over the threshold only temporarily
• you are joining the Agricultural Flat Rate Scheme
• you are a limited liability partnership registering as the representative member of a VAT group
• you are registering the divisions or business units of a body corporate under separate VAT numbers
• you are a local authority, parish or district council
• you are an insolvency practitioner applying to register a business

Source: Register for VAT: How to register for VAT

When does VAT registration start?

Your VAT registration starts on your effective date of registration. If registration is compulsory, that date follows the threshold rules, and HMRC registers you from the date you were liable even if you apply late. If you register voluntarily, you can choose the date, and you can ask for it to be backdated by up to 4 years.

Choose a voluntary date carefully. VAT Notice 700/1 says a request to change the registration date has no right of appeal or review, and once HMRC agrees a date it will not normally let you change it. From that date you must account for VAT on your standard-rated and reduced-rated sales, including sales made before you applied if you pick an earlier date.

Source: VAT Notice 700/1: should I be registered for VAT?

What you get once HMRC registers the company

HMRC checks the details in your application before it sends your VAT number. GOV.UK says you then get the following by post:

• A 9-digit VAT registration number, which you must include on all invoices you raise.
• Information about setting up a business tax account, which you need to use the VAT online service.
• Information about when to submit your first VAT Return and payment.
• Confirmation of your registration date, known as your effective date of registration.

Source: Register for VAT: How to register for VAT

Your VAT online account and certificate

GOV.UK says you must sign up for a VAT online account as soon as you receive your VAT number. Sign in, select 'Add a tax, duty or scheme now', then 'VAT and VAT Services', and choose from the list of services. You can still do this if an agent deals with your VAT.

HMRC's VAT Registration Manual says certificates of registration (VAT 4) are not routinely issued and can be found in the VAT online account.

Source: VAT Registration Manual VATREG03650: certificate of registration

How long does VAT registration take?

GOV.UK's VAT registration pages do not promise a fixed time. HMRC checks every application and contacts you either with the VAT number or to say it needs more information, which makes it take longer. VAT Notice 700/1 says that if you have not heard after 40 working days, contact HMRC's VAT Registration Service.

The same notice asks you not to contact HMRC before then, because it might delay your application. For current reply times, GOV.UK links to HMRC's 'check when you can expect a reply' service. Submit as early as you can, because VAT is owed from the effective date whether or not the number has arrived.

Source: VAT Notice 700/1: should I be registered for VAT?

What to do while you wait for your VAT number

Keep trading and keep records from your effective date. You cannot show VAT on your invoices until you get your VAT number, but you can increase your prices to cover the VAT you will owe HMRC. You can tell VAT-registered customers that VAT invoices will follow.

Once the number arrives, send those customers invoices showing VAT within 30 days. GOV.UK's example: on 1 May a business arranges a £100,000 contract and registers because it will go over the threshold in the next 30 days, so its effective date is 1 May. It tells the customer it will add 20% to the contract amount and invoices £120,000. When the VAT number arrives, it reissues the invoice showing the £20,000 VAT. The customer pays nothing extra and can reclaim that VAT on its next VAT Return.

Source: Register for VAT: How to register for VAT

Your first VAT Return and Making Tax Digital

HMRC's letter tells you when your first VAT Return and payment are due. VAT Notice 700/1 says returns are normally every 3 months, and you must send one for every period, even when there is no VAT to pay or reclaim. If you want tax periods that match your financial year, ask when you register. HMRC can normally arrange this.

GOV.UK says HMRC signs the business up to Making Tax Digital for VAT unless it is exempt or has applied for an exemption. The company must keep digital VAT records and send returns through compatible software, so choose software before the first return is due. Our Making Tax Digital for VAT guide covers the record-keeping rules, deadlines and penalties.

Source: VAT Notice 700/1: should I be registered for VAT?

Can you reclaim VAT on purchases made before registration?

Yes, within limits. GOV.UK says you can reclaim VAT on goods bought within 4 years before registration that you still have, or that were used to make goods you still have, and on services bought within 6 months before registration. The purchases must be for the business now registered and relate to its taxable supplies.

You need valid VAT invoices to support the claim. VAT Notice 700/1 says to include it on your first VAT Return, and that further conditions in section 11 of VAT Notice 700 apply.

Source: Charge, reclaim and record VAT: reclaim VAT on business expenses

Common VAT registration mistakes

These are the slips that most often cost money or time once the decision to register has been made.

• Waiting for the VAT number before thinking about prices. VAT is owed from the effective date, not the date the number arrives.
• Showing VAT on invoices before the number arrives, instead of sending VAT invoices within 30 days of getting it.
• Picking a voluntary registration date without thinking it through. HMRC will not normally change it later.
• Starting the application without the company's UTR. Find or request it first.
• Contacting HMRC before 40 working days have passed, which VAT Notice 700/1 says might delay the application.
• Assuming an agent takes on responsibility for the answers. The company is still responsible for providing accurate information.
• Leaving the VAT online account and Making Tax Digital software until the first return is nearly due.

Source: VAT Notice 700/1: should I be registered for VAT?

How SimpleFilings can help

We can check your answers against the threshold rules and prepare your company's VAT registration, then submit it once you approve it. Our £4.99 SimpleFilings service fee applies to each filing. VAT Returns, bookkeeping and any VAT the company owes are separate and not included. HMRC decides the registration and the effective date, and we cannot promise how long it will take. You can also register directly with HMRC yourself.