Registering for Value Added Tax (VAT) in the UK is a necessary step for businesses and online sellers. Whether you're an English retailer, a foreign company selling in the UK, or a Northern Irish trader, understanding the requirements and process of VAT registration is essential. In this comprehensive guide, we'll walk you through the different scenarios that trigger VAT registration, the registration process, and the importance of timely compliance.
Mandatory Registration for businesses based outside the UK
There is no threshold for the VAT registration in the UK for businesses if all of the following is true:
- you’re based outside the UK
- your business is based outside the UK
- you supply any goods or services to the UK (or expect to in the next 30 days)
Additionally, businesses based outside the UK are obligated to get VAT registered in the UK without the threshold if they plan to keep their goods in the UK fulfilment warehouse and ship it directly to their customers.
Voluntary Registration and VAT Exemption for UK businesses
Businesses with turnover below the £85,000 threshold can choose to voluntarily register for VAT. This option allows for reclaiming VAT on business-related purchases.
Additionally, businesses that briefly exceeded the threshold can apply for a VAT exemption, provided they can demonstrate that they won't exceed the threshold in the next 12 months.
VAT Registration Process
VAT registration in the UK can be completed online through the "Government Gateway" portal.
Follow these steps:
- Register for the Government Gateway account.
- Obtain a Government Gateway User ID for your VAT online account.
- Log in to your VAT online account to complete the registration process and submit VAT returns.
- Consider authorizing a tax agent to handle VAT registration and returns on your behalf.
Alternatively, registration can be done by post using specific forms depending on your circumstances.
VAT Registration Certificate
After submitting the registration application, you will receive a VAT registration certificate from HM Revenue and Customs (HMRC). This certificate will be sent to your VAT online account or delivered by post if online registration wasn't possible.
The VAT registration certificate contains your unique VAT number, which you can use for future transactions.
Conclusion
Registering for VAT in the UK is a crucial step for businesses and online sellers. After Brexit, the process has become more complex and time consuming. HMRC has 40 work days to process the application, and they are not allowing requests for updates during the process.
Compliance with the mandatory registration thresholds for UK businesses, instant VAT registration for foreign businesses, understanding the process, and timely registration are key to avoiding penalties and ensuring smooth operations.
By following the steps outlined in this guide and taking enough time for the process, you can navigate the VAT registration process with confidence and remain compliant with the UK tax regulations.
Remember, consulting a tax professional or referring to official government sources can provide the most up-to-date information and guidance.
