When to register for VAT
You must register if:
- your total VAT taxable turnover for the last 12 months was over £85,000 (the VAT threshold)
- you expect your turnover to go over £85,000 in the next 30 days
You must also register (regardless of VAT taxable turnover) if all of the following are 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)
If you’re not sure if this applies to you, read the guidance on non-established-taxable-persons (NETPs).
You can choose to register for VAT if your turnover is less than £85,000 (‘voluntary registration’).
You must pay HM Revenue and Customs (HMRC) any VAT you owe from the date they register you.
If everything you sell is exempt from VAT, you do not have to register for VAT.
If you exceeded the threshold in the last 12 months
You must register if, by the end of any month, your total VAT taxable turnover for the last 12 months was over £85,000.
You have to register within 30 days of the end of the month when you went over the threshold. Your effective date of registration is the first day of the second month after you go over the threshold.
Between 10 July 2019 and 9 July 2020 your VAT taxable turnover is £100,000. That’s the first time it has gone over the VAT threshold. You must register by 30 August 2020. Your effective date of registration is 1 September 2020.
If you’re going to exceed the threshold in the next 30 days
You must register if you realise that your annual total VAT taxable turnover is going to go over the £85,000 threshold in the next 30 days.
You have to register by the end of that 30-day period. Your effective date of registration is the date you realised, not the date your turnover went over the threshold.
On 1 May, you arrange a £100,000 contract to provide services. You’ll be paid at the end of May. You must register by 30 May. Your effective date of registration will be 1 May.
If you sell goods or services that are VAT exempt and are based in Northern Ireland
If you take over a VAT-registered business
You must register for VAT if the combined taxable turnover of the new business and your existing business is over the threshold.
Calculate your turnover
Your turnover is the total value of everything you sell that is not exempt from VAT. It also includes:
- zero-rated goods
- goods you hired or loaned to customers
- business goods used for personal reasons
- goods you bartered, part-exchanged or gave as gifts
- services you received from businesses in other countries that you had to ‘reverse charge’
- building work over £100,000 your business did for itself
If you register late, you must pay VAT on any sales you’ve made since the date you should have registered.
You might need to pay a penalty, depending on how much you owe and how late your registration is.
If you go over the threshold temporarily
You can apply for a registration ‘exception’ if your taxable turnover goes over the threshold temporarily.
Write to HMRC with evidence showing why you believe your VAT taxable turnover will not go over the deregistration threshold of £83,000 in the next 12 months.
HMRC will consider your exception and write to confirm if you get one. If not, they’ll register you for VAT.
How to register for VAT
Register for VAT
You can usually register for VAT online.
By doing this you’ll register for VAT and create a VAT online account (sometimes known as a ‘Government Gateway account’). You need this to submit your VAT Returns to HM Revenue and Customs (HMRC).
Using an agent
You can appoint an accountant (or agent) to submit your VAT Returns and deal with HMRC on your behalf.
If you’re using an agent, you can still sign up for a VAT online account when you receive your VAT number (select option ‘VAT submit returns’).
When you cannot register online
You must register by post using VAT1 if:
- you want to apply for a ‘registration exception’
- you’re joining the Agricultural Flat Rate Scheme
- you’re registering the divisions or business units of a body corporate under separate VAT numbers
Register by post using:
- form VAT1A if you’re an EU business ‘distance selling’ to Northern Ireland
- form VAT1B if you import (‘acquire’) goods into Northern Ireland worth more than £85,000 from an EU country
- form VAT1C if you’re disposing of assets and you have claimed Directive refunds on them
When you receive your VAT number from HMRC, you can sign up for a VAT online account (select option ‘VAT submit returns’).
After you’ve registered
- a 9-digit VAT number which you must include on all invoices you raise
- information about when to submit your first VAT return and payment
- confirmation of your registration date (known as your ‘effective date of registration’)
You’ll get this in your online VAT account or by post, depending on how you registered.
When you can start charging and reclaiming VAT
Accounting for VAT while you wait for your VAT number
You cannot include VAT on your invoices until you get your VAT number but you can increase your prices to account for the VAT you’ll need to pay to HMRC.
On 1 May, you arrange a £100,000 contract to provide services to a new customer. You register for VAT because you know you’ll go over the threshold in the next 30 days.
Your effective date of registration is 1 May. This means you’ll need to pay VAT to HMRC on any invoices you raise from that date.
To account for the VAT you’ll need to pay, tell your customer that you’ll be adding 20% to the original contract amount of £100,000 and then raise an invoice for £120,000.
After you get your VAT number, reissue the invoice showing the full amount including the £20,000 VAT. Your customer does not need to make any extra payment but can now reclaim the additional £20,000 from HMRC on their next VAT return.
Changing your details
Tell HM Revenue and Customs (HMRC) within 30 days of any changes to the:
- name, trading name or main address of your business
- accountant or agent who deals with your VAT
- members of a partnership, or the name or home address of any of the partners
You might need to pay a penalty if you do not tell HMRC about changes within 30 days.
Changing your bank details
You must tell HMRC at least 14 days in advance if you’re changing your bank details.
If you pay your VAT by Direct Debit, you’ll need to tell your bank as well. Do not do this in the 5 banking days before or after your VAT return is due – it could mean you get charged twice.
How to tell HMRC
You can change your details:
If you take over someone else’s VAT responsibilities
You must tell HMRC within 21 days if you take over the VAT responsibilities of someone who has died or is ill and unable to manage their own affairs.
Use form VAT484 and post it to the address on the form. Include the details of the date of death or the date the illness started.
If you join a VAT group
If you change your business structure
You need to tell HMRC if you change the structure of your business.
You can transfer your VAT registration if you want to keep the same VAT number.
Cancel your registration
You must cancel your registration if you’re no longer eligible to be VAT registered. For example:
- you stop trading or making VAT taxable supplies
- you join a VAT group
You must cancel within 30 days if you stop being eligible or you might be charged a penalty.
If your VAT taxable turnover falls below £83,000 you can ask HM Revenue and Customs (HMRC) to cancel your registration.
How to cancel
Cancel your VAT registration online.
If you cannot use the online service, fill in and send form VAT7 to cancel your VAT registration by post.
What happens next
It usually takes 3 weeks for HMRC to confirm your cancellation and the official cancellation date. This is either the date when the reason for your cancellation took effect (for example, when you stopped trading), or the date you asked to cancel.
HMRC will send confirmation to your VAT online account or through the post if you do not apply online.
You must stop charging VAT from the cancellation date. You’ll need to keep all VAT records for 6 years.
HMRC will automatically re-register you if they realise you should not have cancelled. You’ll have to account for any VAT you should have paid in the meantime.
VAT after you cancel
You’ll have to submit a final VAT Return for the period up to and including the cancellation date.
You must account for any stock and other assets you have on this date if both of the following apply:
- you reclaimed or could have reclaimed VAT when you bought the assets
- the total VAT due on these assets is over £1,000
You must submit your final return within one month of the cancellation date, unless you are on the Cash Accounting Scheme.
If you’re on the Cash Accounting Scheme, submit your final return within 2 months of the cancellation date.
Do not wait until you’ve received all your invoices before submitting your final return. When you get them you’ll still be able to reclaim VAT.
ransfer your registration
You can transfer a VAT registration if there’s a change of business ownership or legal status.
For example, if:
- you take over a company and want to keep using its VAT number
- your business changes from a partnership to a sole trader
This means the business will keep the same VAT number.
Apply for a transfer
You can apply for a VAT registration transfer:
- by post
If you own the VAT registration, sign into your VAT online account using your Government Gateway ID and password.
You’ll need to select ‘cancel VAT registration’. You will then be asked if you’re transferring the business or if it’s changed its legal status.
If you’re buying the business or changing its legal status, you will need to register for VAT.
Apply by post
What happens next
It usually takes 3 weeks for HM Revenue and Customs (HMRC) to confirm the transfer.
If you’re selling your business:
- cancel your accountant’s access to your VAT online account – for example if you authorised them to deal with your VAT
- cancel any direct debits on your VAT online account
You must also give your records to the buyer if you’re passing on your VAT number.
If you’re buying a business:
- contact HMRC within 21 days of the transfer application if you want to keep the seller’s accountant
- replace any self-billing arrangements with new ones
- set up new direct debits on your VAT online account
If you prefer to get a new VAT number
Registering for VAT in EU countries
What you need to do depends on whether you’re selling goods or services and where you’re selling from.
If you sell goods from Northern Ireland to the EU
If you sell goods from Northern Ireland to customers in the EU and go above the distance selling threshold, you’ll need to pay VAT on these sales in the country the goods are sent to.
You must register for either:
- the VAT One Stop Shop (OSS) union scheme
- VAT in each country where you’re supplying goods
If you sell goods from the UK to the EU
You do not normally need to charge VAT on goods you sell to any customers outside the UK. You only need to be registered for VAT with HM Revenue and Customs (HMRC). You can charge VAT at zero rate for these sales.
If you supply services from the UK to the EU
If you supply services from the UK to customers in the EU, you can register for the non-union VAT OSS.
Find out more about the non-union VAT OSS on the European Commission website.
Find out what to do if you supply digital services to customers in the EU.
Selling or moving goods between Northern Ireland and the EU
You need a VAT number starting with XI to trade under the Northern Ireland Protocol.
You are eligible to operate under the terms of the Northern Ireland Protocol if any of the following apply:
- your goods are located in Northern Ireland at the time of sale
- you receive goods in Northern Ireland from VAT-registered EU businesses for business purposes
- you sell or move goods from Northern Ireland to an EU country
Check if you’re already identified as trading under the Northern Ireland Protocol.
Telling HM Revenue and Customs (HMRC) will help them to identify you as trading under the Northern Ireland Protocol. This will mean that:
- you can use VAT simplifications when you trade with the EU
- your suppliers can charge goods that they send to you from the EU at zero rate
- your trade with the EU can still be listed as ‘acquisitions and dispatches’ on your VAT return
Tell HMRC you’re eligible
- the Government Gateway user ID and password you used when you registered for VAT
- your VAT registration number
- the name of your business
After you tell HMRC
You’ll get an email from HMRC to confirm that you’ve been recorded as operating under the Northern Ireland Protocol.
After you get the email, you’ll need to start using the XI prefix before your usual VAT number – for example, XI 123456789 instead of GB 123456789.
Using your XI VAT number
You must use your XI VAT number on all documentation when communicating with EU customers or suppliers (for example, on invoices).
If you’re selling goods from Northern Ireland to VAT-registered customers in the EU, complete an EC Sales List.
If you do not tell HMRC or use an XI VAT number, it could mean that you pay or charge the wrong VAT on goods.
If you’ve stopped selling or moving goods in Northern Ireland
Use the online service to tell HMRC.
You must complete any obligations you have for the following schemes before you revoke your Northern Ireland trader status:
- VAT One Stop Shop (OSS) union scheme returns
- EC sales lists
- EU VAT refunds
You will not be able to complete any obligations for these schemes once you’ve told HMRC you wish to revoke your status.