Every eligible business must legally register for Value Added Tax (VAT) as part of the government’s revenue collection process. The talk around VAT registration can be confusing, especially for business owners who need to learn their way around it.
Understanding when you should register for VAT and the processes involved before getting your railroads mixed up is ideal. There are several steps to ensure successful VAT registration online to avoid the penalties that tag along when you do otherwise. But as complex as this process can be, claiming it’s the hardest to pull off is quite an overstatement.
This guide will take you through the steps for registering for VAT online to make this process a breeze. Please read on to learn more.
Understanding Value-Added Tax
Value-added tax is a form of consumption tax on goods and services levied at every distinct stage of the supply chain, from production to selling. Every illegible business must pay this tax as the law requires. However, do you know that most companies do not understand how to register for VAT online?
Rightly so, this process may be challenging for some business owners as it can be procedural. It takes understanding the eligibility requirements, who to go to, and the type of documentation needed to start your registration. But essentially, there are pitfalls to avoid to prevent you from making costly mistakes that could disorient your business and disrupt operations.
The Prerequisites: Documentation, Information, and Eligibility
Before registering for VAT, it’s best to understand that registration is usually free on Her Majesty’s Revenue and Customs (HMRC) website. However, you may still incur costs when filing your returns later when engaging an accountant, for example. Besides, every business that surpasses the £85,000 threshold must register for VAT.
The documents and information your business may require to register for VAT include the following:
- Certificate of incorporation
- Business contact information
- National Insurance number
- The company’s main area of business
- A brief description of your business operations
- Bank account details
- A step-by-step guide to registering for VAT online
- Copy of government-issued photo and two additional pieces of evidence that prove residential address and full name for non-UK residents with no NI number
- A tax identifier, such as the Unique Taxpayer’s reference (UTR) or any reference your country’s tax authority uses to identify you.
A Step-By-Step Guide on How to Register for VAT Online
As complex as registering for VAT may seem, understanding the steps can make completing it more effortless. Below are the steps to take when registering for VAT online.
1. Understand the Prerequisites
It helps to understand what’s required when registering for VAT, including the documentation and information to provide. These documents and information requirements can be different for UK residents and non-residents, so a little more digging can go a long way. Understanding the play around the £85,000 registration threshold is also good.
Your total VAT turnover tax must have surpassed £85,000 over the past 12 months or expect to pass the mark in the next 30 days. UK VAT registration usually occurs online through the HMRC website if you’re not trading internationally.
2. Create an HMRC Account
Creating an HMRC Gateway account lets you register for VAT and file your returns later. Signing up for one isn’t challenging either since you only need to visit the HMRC website, find the green VAT hyperlink, and go to “sign in to your VAT online account.” Click the green “Start Now” button and submit your business’s details.
If you live abroad, you will receive a 12-digit activation code in about 10 or 21 days. This digit will enable you to create a new VAT online account with HMRC and will be instrumental in filing your VAT returns.
3. Access the VAT Registration Form and Apply for Your VAT Certificate of Registration
You can access the VAT registration form once your Government Gateway account is ready and apply for your VAT certificate registration. This form can be rigorous regarding the information collected. Therefore, it’s best to have every piece of information required handy.
You may have to submit your business details, including the name, address, contact information, and the date the business started. Moreover, your business structure information should include the type of legal structure, whether a partnership, limited company, or sole trading. Turnover information can include the expected turnover for the next 12 months and the details of your goods and services.
You’ll also have to report your business activities by stating whether you’re taking a business already registered for VAT, providing your bank account details, and other additional information. While giving out this information, please ensure it is accurate to avoid issues with HMRC.
4. Wait for Processing and Confirmation
The VAT certificate processing can take ten days to a month after submitting your application before the HMRC provides one. This certificate indicates that you’ve officially registered your business and can proceed to register with HMRC online. This certificate will provide:
- Your VAT registration number.
- The postcode of your principal place of business.
- The effective registration date.
You shouldn’t expect confirmation emails since HMRC doesn’t usually send them. However, you should know that your registration is successful if you can access your account and send your VAT revenues.
Conclusion
Every business must register for VAT in the UK, which usually occurs online if they meet the revenue threshold. Although this process can be more procedural, understanding the steps to register for VAT online successfully can make it relatively straightforward. Please always check your VAT return payment deadlines and submissions in your HMRC online account and stay constantly updated.