Every firm that has registered for VAT is given a VAT number, a unique identification number.
Only companies registered for VAT are issued a VAT number, and the importance or implication of this number is for taxation. As a result, a VAT number is frequently referred to as a VRN, which stands for a VAT registration number.
It is possible to have more than one of these numbers, and a VAT number should not be mistaken for a Unique Taxpayer Reference or a Company Registration Number.
VAT, or value-added tax, is a term that most of us are familiar with. Many goods and services in B2C and B2B marketplaces are subject to this consumption tax. Few individuals, however, are aware of what is liable for VAT.
What Products Are Subject To VAT?
VAT is levied on the following transactions:
commercial sales of the products or services,
selling off business assets,
Items sold to employees, such as meals from the cafeteria,
Commissions, etc.
Since the UK exiting the EU single market and customs union, UK VAT is now separately controlled by HM Revenue & Customs (HMRC). When a firm registers for VAT, the HMRC issues it with a VAT number and a unique ID. In the UK, VAT numbers are usually prefixed with the letters GB and are nine digits long.
When Should You Obtain A UK VAT Number?
Before completing any VAT applications, you must know the circumstances under which a UK VAT number is required. Different restrictions apply depending on your business’s location and income.
The current VAT registration threshold for UK businesses is £85,000. In other words, you must register when your VAT-taxable turnover surpasses £85,000 for a year.
This also holds if you anticipate that during the following 30 days, your VAT-taxable turnover will surpass the threshold. You are not required to obtain a UK VAT number if your company falls short of this mark. However, one can freely undergo VAT registration UK.
Now that VAT is optional, you may wonder why a business would go through the red tape. You might still think about it because it has certain advantages. For instance, you’ll be able to claim the VAT back on the items and services your business purchases. Deals with other VAT-registered companies are also made more accessible.
There are no criteria if your firm is not situated in the UK. As soon as you start supplying goods and services to the UK, or within the following 30 days if you anticipate doing so, you must register for UK VAT. Before Brexit, a £70,000 distance selling threshold may have been advantageous for non-UK enterprises. However, this criterion has been eliminated due to new trade regulations.
How To Get VAT-registered?
You can register for VAT in one of two ways: online or with a paper VAT1 form.
Fortunately, assuming you have everything you need to register, both methods are simple.
What You Need-
You’ll require the following to finish your VAT registration:
Your company’s contact information
Account information
one-of-a-kind tax reference number
information about your business’s type and revenue.
How To Go About Online VAT Registration
A Government Gateway ID—a string of 12 numbers you use together with a password to access the HMRC portal is required to register for VAT.
Your VAT online account is your Government Gateway account.
Online VAT registration without a Government Gateway
Select the suitable choice on the Register for HMRC taxes page, then click the “next” button to go through the pages.
Choose “Create an account for me” on the last page.
To create your Government Gateway ID, enter your information. You’ll need to often refer to your user ID and password, so keep them in a secure location.
Enter your Government Gateway login information on the sign-in screen.
After signing in, scroll down to the “Get another tax, duty, or scheme” area and press the button.
To finish your application for VAT registration, choose VAT and follow the remaining instructions.
Online VAT registration with a Government Gateway
Select the suitable choice on the Register for HMRC taxes page, then click the “next” button to go through the pages.
On the last screen, click “I have an account – login.”
Enter your Government Gateway login information on the sign-in screen.
After signing in, scroll down to the “Get another tax, duty, or scheme” area and press the button.
To finish your application for VAT registration, choose VAT and follow the remaining instructions.
Advantages of VAT Registration?
You can claim VAT refunds: To avoid paying VAT on business costs, you might opt to register voluntarily; you can then claim a refund when you submit your VAT Return. Imagine you’re launching a bookshop or beginning a professional services firm, and you need to purchase, among other things, seats, shelves, tables, laptops, and office supplies. Before your company’s revenue reaches £85,000, you can get HMRC to reimburse you for the VAT component of this expense.
You can reclaim VAT paid in the past: You may be able to claim VAT for products from the previous four years that you are still using by registering for VAT. You would need to have been in business for that amount of time and maintained VAT invoices and records during that time.
Legitimacy: The gravity and professionalism of your business projects are advantages of VAT registration. Being a VAT-registered business owner demonstrates to many clients and suppliers that you are a “legitimate” company.
Conclusion
VAT registration has never been more accessible. As a small company owner, you could be attracted to the advantages of getting VAT registered. But remember that you must maintain proper records and file timely VAT reports.
