Value Added Tax (VAT) is a consumption tax levied on the sale of goods and services in the UK. Understanding when and why to register your business for VAT is crucial both for compliance reasons and also as part of effective financial planning.
Registering your business for VAT at the appropriate time ensures compliance with the law, but can also provide financial benefits.
Who needs to be registered?
You must register for VAT if your business’s taxable turnover exceeds the threshold of £90,000 in any 12-month period. In this scenario, you have 30 days to register and you will be registered effective for the start of the next month after notifying.
Additionally, you must register if you expect to surpass this threshold within the next 30 days alone. In this case, you must register by the end of that 30-day period and your effective date of registration will be the date you realised you would exceed the threshold.
International trade (non-established businesses)
If your business is based outside the UK you must register regardless of VAT taxable turnover if you are making any taxable supplies in the UK. If you trade goods or services across EU borders or with other international markets, you may also need to register for VAT in those jurisdictions, depending on their specific VAT regulations.
Voluntary registering
Even if your turnover is below the threshold, voluntary VAT registration can be beneficial. This option is particularly advantageous if you deal primarily with other VAT-registered businesses or intend to reclaim VAT on business-related purchases.
Consequences of not registering
Failing to register for VAT when required can lead to serious consequences for your business, including financial penalties, backdated VAT payments, and potential legal action. Ensuring timely registration helps avoid these risks and supports smooth business operations.
Where can I register my business for VAT
To apply for a VAT number, visit the
government's website. Online applications are dealt with most quickly. On submission you may receive an automated message informing you that they will get back to you within 8 weeks; however, as long as your application is complete it should take much less time than that.
How can we help?
As well as advising you on the optimum time to register, we can:
- assist with your application,
- advise what you should do in the meantime,
- advise on record-keeping requirements
- ensure you maximise VAT recovery including in some cases on costs incurred prior to registration.
For further advice, please contact your usual Moore adviser.