It is essential to understand what VAT means for your business. If you don't have a VAT number on your business, you can register for VAT online or by using a VAT1 paper form. And if your company is subject to VAT, you must follow the Making Tax Digital rules to submit your VAT returns.
Read this article to learn more about the VAT including who needs to register for VAT, how to register for VAT, what you need to register, how to check if a business is VAT registered or not, what is a VAT number and what are the advantages of VAT registration. First let's have a look at:
Who Needs to Register for VAT?
Some companies are required to register for VAT, others are not, and some companies have a choice.
Who should register for VAT: Companies with an annual taxable turnover exceeding £ 85,000. If you don't register, you can be fined.
Those who cannot register for VAT: Businesses that only sell goods and services that are exempt from VAT.
Who can choose to register for VAT: Companies with an annual taxable turnover of less than £ 85,000.
How Can I Register for VAT?
There are two ways to register for VAT: register online or use a paper VAT1 form.
Fortunately, both approaches are easy once you have everything you need to register.
What Do I Need to Register?
To register you must have:
● A National Insurance (NI) number or Unique Taxpayer Reference (UTR)
● Information on other companies you have held in the past two years
● Bank account information for your business
If you bought the company, you need to provide the sales details.
Registering for VAT Online
To register for VAT, you will need a Government Portal ID, a series of 12 digits that you use in conjunction with a password to log into the HMRC Portal. Your Government Gateway account is your online VAT account.
● Online VAT registration without a government portal
● Go to the Register for HMRC taxes page, select the appropriate option and then click the "Next" button to scroll through the pages.
● On the last page, select "Create an account for me".
● Enter your details to create your Government Portal ID. Keep your username and password in a safe place as you will need to check them regularly.
● Enter your Government Portal credentials on the login page.
● Once you've signed up, scroll down to the Get another tax, and click the button below.
● Select VAT and follow the final steps to complete the VAT registration application.
Online VAT Registration If You Have a Government Gateway
● Go to the Register for HMRC taxes page, select the appropriate option and then click the "Next" button to scroll through the pages.
● On the last page, select "I have an account - login".
● Enter your Government Portal credentials on the login page.
● After logging in, scroll down to the Get another tax and click the button below.
● Select VAT and follow the final steps to complete the VAT registration application.
Registering for VAT using the VAT1 Form
Most companies can register online. However, there are situations where you need to register your business for VAT offline. If you are unable to register online, fill out the VAT1 form and send it back to HMRC.
After Registering for VAT
You must
:
● Add VAT to your prices
● Issue VAT Invoices To Your Customers
● Submission of VAT returns and payment of VAT to HMRC
● Maintain a digital VAT record and VAT account
Note: You can register voluntarily if your company has a taxable annual turnover of less than £ 85,000.
How to Check If a Company is Subject to VAT?
However, it can be difficult for a company to verify whether its business is subject to VAT or not. Do not be worried! Pro Tax Accountant can help enterprises to determine whether a business is subject to VAT or not. When a company is dealing with a new supplier or customer or wants to expand its business and wishes to verify that the provided VAT registration number (VRN) is legitimate or not, there are two ways to proceed: either company contact the HM Revenue and Customs (HMRC) VAT Helpline or use the digital platform, use the digital platform i.e. online VAT Information Exchange System (VIES) (managed by the European Commission), let's understand it a little better
Call the HMRC VAT Helpline
To confirm whether a VAT number is valid, businesses can call the HM Revenue and Customs (HMRC) Value Added Tax (VAT) helpline on 0300-200-3700 between 8 am to 8 pm. during the week. However, this method has some limitations. Firstly, HMRC can only verify VAT numbers for UK-registered businesses. In addition, the limited time frame or opening hours of the VAT Helpline can be a challenge for UK businesses.
Use of the Digital Platform - Online VAT Information Exchange System (VIES)
In addition to calling HMRC's VAT Helpline, UK businesses can use the digital platform. The VIES portal (managed by the European Commission) helps a company verify the legality of a VAT number for any company in the EU. The VIES portal uses live data feeds from all UK Member State VAT systems; Therefore, the information provided is constantly updated. The main reason for creating the VIES service was to address the growing threat of 'carousel fraud', involving innocent people and businesses in the UK in a chain of fraudulent transactions.
To access the European Commission's VIES to approve a VAT number, click here or contact Pro Tax Accountant if you need help. When the company opens the VIES website, it can select from the drop-down menu (Member State and VAT number and Requesting Member State and VAT number). The company provides relevant information about the country where the company is located and then submits the VAT number for verification. The website then tells the company whether the number is valid or not.
What is a VAT Number?
A VAT number is a unique identification number assigned to each VAT registered company. VAT numbers are used for tax purposes and are issued only to companies, subject to VAT. Therefore, a VAT identification number is often called a VAT registration number.
How to Get a VAT Number?
When you register for a VAT, you will be assigned a VAT number. Once you have completed the VAT registration process, you will receive a VAT registration certificate, which will include your VAT number, the date of your first VAT return and your "Effective Registration Date" (this is the VAT due date).
What are the Advantages of VAT Registration?
Let's say you're opening a restaurant or service business and need to buy chairs, tables, and computers, among other things. You can reclaim the VAT part of that cost from HMRC and return the money to the company before you expect sales to exceed £ 85,000.
If you don't pay VAT, you know your turnover is less than £ 85,000. One of the advantages of VAT registration is the image of seriousness and professionalism that it creates for your business.
The statement "Am I subject to VAT? Yes, of course," makes it clear that you are a "real" company in the eyes of many customers and suppliers. You must submit your VAT returns to HMRC every quarter. Some companies find this additional administration difficult, but you like having to keep your books up to date regularly.
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