Before you can register your business for VAT (value-added tax), you will need to possess several key documents:
- A National Insurance number or a ‘tax identifier’ which acts as a reference for all taxpayers
- A certificate of incorporation
- Details of businesses you have associated with over the past two years
- Details of transferred/acquired business
- Bank account details
You can register for VAT either online or through a paper form. Apart from under exceptional circumstances, for instance, prior experience in international trade or being part of a group, you can almost always register for VAT online through HMRC’s website www.hmrc.gov.uk.
However, you can only access VAT online services after registering for HMRC Online Services or the Government Gateway. Note that in the event you are registering a partnership for VAT online, you must fill and submit a VAT2 paper form. This form informs HMRC who the registering partners are since the HMRC’s online system has not integrated these features.
Paper form online registration
Alternatively, if filling the information online is a handle for you, you can register via the form VAT1 that is downloadable from HMRC’s website.
HMRC is purely electronic
Regardless of the method of registration you choose to employ, all newly VAT-registered companies should submit VAT returns and VAT payments electronically.
After receiving the certificate of registration (VAT4), you move on and register for VAT Online services with HMRC through their website. This requires the following information:
- VAT registration number
- The effective date of your VAT registration
- The postcode of your primary place of operation (postcode AB10 1ZP typically applies to businesses operating overseas)
- The final month of the last submitted VAT return
- The ‘Box 5’ figure from the last submitted VAT return
You can find the VAT registration number, postcode of the primary place of business and the effective date of VAT registration on the VAT4 form.
Since your start-up is newly VAT-registered it is important to select ‘N/A’ for the ‘final month of last VAT return submitted, ’ and key in 0.00 (zero) for the ‘Box 5’ figure on last VAT Return submitted.
Reclaiming the VAT on purchases made before VAT registration
After your start-up is VAT registered, you can recover some historic VAT although the timeline and conditions may vary depending on whether your business deals with goods or services.
In this case, you can reclaim the VAT if you bought or imported the goods up to four years before registering for VAT as long as:
- The business entity that you registered for VAT purchased the products.
- The goods are for VAT taxable business purposes (if you used the products for a part of business that is exempt for VAT purposes then the VAT cannot be reclaimed)
- The business entity still holds the products, or you used the goods to make other goods still owned by the business entity (although this is hard to achieve because usually the products will have been already sold, or they have already perished)
In the case of services, you can reclaim VAT if you purchased the services up to six months before VAT registration, under two conditions:
- The business entity now registered for VAT bought the services
- The services were for VAT taxable business purposes
Newly VAT registered start-ups can also reclaim the VAT incurred on accountancy fees as well legal advice.
For more information on this, please contact us. At the Accountancy Cloud we have the professionals you need to provide you with the necessary tax help from tax registration to VAT MOSS to tax planning.