To get started with your registration for VAT, you will need to have the following information:
- National Insurance
- Certificate of incorporation/incorporation details
- Relevant information of all associated businesses within the previous two years
- Business bank account details
- Details of the business that was acquired, if appropriate
There are two major ways to register for VAT. It can either be done through a paper form or online.
This is usually the most preferred form of registration, especially because of its ease. There are certain categories or circumstances that may prevent individuals from registering for VAT online. The two major reasons are if the business trades internationally or is part of a group of businesses. Registration is carried out at the official HMRC website, www.hmrc.gov.uk.
To begin with the registration, one has to be eligible by first getting registered for the Government Gateway or HMRC Online Services.
As a side note, you would be required to fill and submit a VAT2 paper form if you are registering a partnership. The VAT2 tells the HMRC that number and names of the partners involved in the business. This form is yet to be included into the HMRC’s online system.
Registering through a paper form
If you are not comfortable with the online registration or fall into the circumstances mentioned above, the paper form is a viable alternative. All you have to do is to download a VAT1 form from the HMRC’s website. While this may seem like an alternative to the online, the truth is…
HMRC is paperless
No matter the option that is chosen, submission of all VAT payments and returns must be made electronically by all newly VAT registered businesses. This is not just applicable to only newly registered businesses but also to all other VAT registered businesses. This took effect from April 1, 2012.
To proceed to register for the VAT Online Services with HMRC, you would have to complete your certificate of registration (VAT4 form) and have it approved. To proceed with this stage you will need this information about your business:
- VAT registration number
- Postcode of your main address of your business. If your business is located overseas, you will need to make use of postcode AB10 1ZP
- Effective date of VAT registration
- Final month you submitted your last VAT return
- The ‘Box 5’ figure from the last VAT return you submitted
In case you are unable to locate the first 3 information listed, you can go back and check them on your VAT4 form.
Since you will be registering a new business for VAT, you would not have a VAT return. So in this case, select ‘N/A’ where you are asked the ‘final month of last VAT return submitted’. In the place of ‘Box 5’ figure on last VAT return submitted, input 0.00 (zero).
Purchase made prior to VAT registration – reclaiming the VAT
To be able to recover some historic VAT information, you would have completed the VAT registration. The conditions required and the time frame it would take differs with the nature of the business. By nature, this means whether the business will be dealing in goods or services.
It is very possible to get a reclaim on VAT for goods purchased or imported as far back as four years before you decided to register for VAT. This can be achieved if it meets all the requirements below:
- You purchased the goods as the entity and it is now registered for VAT
- The goods purchased are for your VAT taxable business purposes
- You still hold the goods or have used them to make other goods still in your possession
Among these requirements, the last one is usually the most difficult to meet. This is because the chances that the goods has not been sold or perished are very slim. If you look closely at the second requirement, you will observe the goods in question must be for VAT taxable business purposes. In other words, if the goods are used for purposes that are not VAT included, this makes them void and the VAT cannot be reclaimed.
For this reason, during VAT registration, HMRC usually advises that a proper stock is taken to determine what is available at the time of registration.
In the case of services, VAT can be reclaimed only if the services were purchased within six months before VAT registration. This condition is only eligible if it meets these two conditions below:
- You bought the services as the entity and registered it for VAT
- These purchased services were bought for your VAT taxable business purposes
As a new business, it is common to have incurred a certain level of professional fees. These fees would include; tax and/or legal advice and accountancy. As long as those two conditions are readily met, your business should be able to easily reclaim the VAT.
Irrespective of the nature of the business, whether goods or services, you would need to have all the VAT invoices. When you recover the VAT element, it should bear the amount on the VAT invoices and not the current rates of VAT.
Lastly, you are expected to record all of these transactions just like any other businesses would normally do. In addition to the stock taken stated above, HMRC advises that proper records are taken, especially if they are goods, to know about their usage, expiration date, and other necessary details.