Should I be registered for VAT?

HMRC Reference:Notice 700/1 (Mar 2014) View Change History
 

Contents

Foreword

1. Introduction

1.1 What is this notice about?

1.2 What’s changed?

1.3 Who should read this notice?

1.4 Force of law

2. Basic principles

2.1 What is VAT?

2.2 What are the different rates of VAT?

2.3 What are taxable supplies?

2.4 What are zero-rated supplies?

2.5 What are reduced-rate supplies?

2.6 What are exempt supplies?

2.7 What are specified supplies?

2.8 What if I opt to tax my land and buildings?

2.9 What if I only supply goods or services abroad?

2.10 What if I take a business over from somebody else?

2.11 What if I have been registered for VAT before?

2.12 Do I have to register for VAT if I live or work abroad?

3. Working out whether you need to register

3.1 When do I have to register for VAT?

3.2 Registration thresholds

3.3 How can I work out when I become liable to register?

3.4 Working out the value of your taxable supplies

3.5 Working out the value of your distance sales

3.6 What can I register as?

3.7 What if I have reached the thresholds but I expect the value of my taxable supplies to go down?

3.8 Taking over a business as a going concern

3.9 Can I register even though I am not liable?

3.10 Applying for voluntary registration if you make relevant acquisitions

3.11 Exemption from registration

4. How and when to tell us

4.1 How do I tell you?

4.2 When do I have to tell you?

4.3 What will my registration date be?

4.4 Working out when to tell us - examples

4.5 When will I get my VAT registration number?

4.6 What if I don't tell you at the right time?

5. Accounting for VAT

5.1 When must I start keeping records and charging VAT?

5.2 What about VAT I paid before I registered?

5.3 What records do I need to keep?

5.4 Is there anything which will help me account for VAT?

5.5 What is a VAT return?

5.6 Can I make returns once a month?

5.7 What are outputs and inputs?

5.8 Can I have tax periods which match my financial year?

6. Distance selling

6.1 What is distance selling?

6.2 How does distance selling work?

6.3 What happens after I register in the UK?

6.4 What if I am already registered for VAT in the UK?

6.5 What if I make distance sales to more than one Member State?

6.6 What if I make distance sales of excise goods?

6.7 What if I want to make the UK my place of supply?

6.8 Can I register in the UK before I start making distance sales?

6.9 What if I don't have a business establishment in the UK?

7. Relevant acquisitions

7.1 What are relevant acquisitions?

7.2 When must I register and account for VAT?

7.3 Can I register if I am below the threshold?

7.4 Can I register before I start making relevant acquisitions?

7.5 Will I always need to register if I make relevant acquisitions?

8. Relevant supplies of assets

8.1 What are relevant supplies?

8.2 What is a predecessor?

8.3 Do I have to register?

8.4 What if I am already registered for UK VAT?

9. Non-established taxable persons (NETPs): basic information

9.1 What is an NETP?

9.2 What is a UK establishment?

9.3 When must an NETP register for VAT in the UK?

9.4 What if I have an establishment in the UK?

10. Non-established taxable persons (NETPs): voluntary registration

10.1 When can I register voluntarily as an NETP?

10.2 How do I register voluntarily for VAT?

11. Non-established taxable persons (NETPs): tax representatives and agents

11.1 Appointment and role of a tax representative

11.2 What must I do if I appoint a tax representative?

11.3 Will you make me appoint a tax representative?

11.4 May I appoint an agent instead of a tax representative?

11.5 Suggested wording for letter to authorise an agent or employee to act in VAT matters

11.6 What if I don't want to appoint a tax representative or an agent?

12. What happens after I register?

12.1 Help and information for newly registered businesses

12.2 Visits by our officers

12.3 What should I do if my registration details change?

12.4 What should I do if I change legal entity?

13. Errors, late notification and fraud

13.1 What if I get my registration date wrong?

13.2 What if I notify you late?

13.3 What if I deliberately avoid registering for VAT?

14. Example forms

14.1 The following forms published by the Commissioners under Regulation 5 (1) of the VAT Regulations 1995 are those which must be completed if you are required to register for VAT, or may need to be completed when registering, for VAT

15. List of offices

16. Registration limits

Your rights and obligations

Do you have any comments or suggestions?

Putting things right

How we use your information

 

Foreword

This notice cancels and replaces Notice 700/1 April 2010. Details of any changes to the previous version can be found in paragraph 1.2 of this notice.

1. Introduction

1.1 What is this notice about?

This notice tells you when you must register for VAT and how to do it.

1.2 What’s changed?

We have made changes to the April 2010 edition to reflect:

  • the introduction of a new online system for registering for VAT
  • the removal of the VAT registration threshold for non-established taxable persons

We have moved the Statement of Practice about artificial separation of business activities to the list of statements of practice on our website (www.hmrc.gov.uk).

We have included copies of all the forms associated with registering for VAT.

1.3 Who should read this notice?

You should read this notice if you:

  • are based in the UK and make business supplies of goods or services here
  • make sales from the EU into the UK
  • acquire goods into the UK from the EU
  • sell certain assets
  • make business supplies of goods or services in the UK, but are not resident here

1.4 Force of law

Section 14 contains images of a number of VAT forms which carry the force of law under Regulations 5 and 10 of the VAT Regulations 1995.

2. Basic principles

2.1 What is VAT?

Value Added Tax (VAT) is a tax businesses have to charge when they make business supplies (that is, they sell goods or services) in the United Kingdom (UK) or Isle of Man.

Examples of business supplies include:

  • selling new and used goods, including hire purchase
  • providing a service, for example, hairdressing or decorating
  • charging an admission price to go into buildings
  • a self-employed person providing supplies, for example, some salesmen and subcontractors

VAT is also charged on:

  • goods, and some services, which are imported from places outside the European Union (EU)
  • goods and services which come into the UK from another EU Member State

2.2 What are the different rates of VAT?

Rate of VAT


also known as


applies to supplies of


20%


standard rate


most goods and services.


5%


reduced rate


for example,


  • fuel and power used in the home and by charities
  • women’s sanitary products
  • paragraph 2.5).

0%


zero rate


certain goods and services on which you do not need to charge VAT (see paragraph 2.4).


2.3 What are taxable supplies?

A ‘taxable supply’ is any supply made in the UK which is not exempt from VAT. Taxable supplies include those which are zero-rated for VAT.

A supply which is not VAT-exempt is always a taxable supply whether or not the person making it is registered for VAT.

However, you don't have to account for VAT on the taxable supplies you make when:

  • you are not required by law to be VAT registered, and
  • you have not registered for VAT voluntarily

If


then


the value of the taxable supplies you make is over a specified threshold


  • must register for VAT.
  • the 1 December 2012,
  • you are a non-established taxable person (see section 9), and
  • you make any taxable supplies in the UK
  • must register for VAT.

you are registered for VAT


  • must account for VAT on all the taxable supplies you make (apart from the zero-rated ones) from the date that you are first registered.

In most cases, a ‘supply’ is the sale of goods or services, including sale by barter. It can also include ‘deemed supplies’. ‘Deemed supplies’ include:

  • some services you receive from overseas (see Notice 741, section 16). Although you receive the supply, you are deemed also to have made it
  • where you use your own labour to construct a building for your own business use you are, in certain circumstances, deemed to have supplied the value of the labour (see Notice 708, section 25)

Contact the VAT Helpline for further advice if you think this applies to you.

2.4 What are zero-rated supplies?

Zero-rated supplies are taxable supplies on which the current VAT rate is 0%.

Examples include:

  • most food (but not meals in restaurants or cafes or hot takeaway food and drink)
  • books
  • newspapers
  • young children's clothing and shoes
  • exported goods (for further information, see Notice 703 Exports and removals of goods from the UK)
  • most prescriptions dispensed to a patient by a registered pharmacist
  • most public transport services

This isn't a full list. If you are not sure whether the supplies you make are zero-rated, please call the VAT Helpline on telephone: 0300 200 3700.

If all or most of your supplies are zero-rated, you may not need to be registered for VAT. This is called exemption from registration (see paragraph 3.11).

2.5 What are reduced-rate supplies?

Reduced-rate supplies are taxable supplies on which the current VAT rate is 5%.

Examples include:

  • supplies of domestic fuel or power
  • installation of energy-saving materials
  • grant-funded installation of heating equipment or security goods or connection of gas supply
  • women's sanitary products
  • children's car seats
  • residential conversions
  • residential renovations and alterations

This isn't a full list. If you are not sure whether the supplies you make are reduced-rated, please call the VAT Helpline on telephone: 0300 200 3700.

2.6 What are exempt supplies?

Exempt supplies are business supplies which don't meet the definition of 'taxable supplies'. In other words, they are business supplies on which VAT is not charged.

Examples include:

  • certain selling, leasing and letting land and buildings (but not lettings of garages, parking spaces or hotel and holiday accommodation). See Notice 742 Land and property
  • insurance
  • betting, gambling and lotteries (but not takings from fruit machines)
  • providing credit
  • certain education and training
  • fund raising events by charities
  • subscriptions to certain membership organisations
  • the services of doctors and dentists
  • certain services from undertakers

This isn't a full list. If you are not sure whether the supplies you make are exempt from VAT, please call the VAT Helpline on telephone: 0300 200 3700.

If:

  • you are registered for VAT
  • some of the supplies you make are exempt

you may not be able to get back all the VAT you have been charged on things you bought for your business. Notice 706 Partial exemption tells you more about this.

If all your supplies are exempt, you will not be able to register for VAT.

2.7 What are specified supplies?

Specified supplies are supplies which would be exempt from VAT if you made them in the UK.

If


then


you supply


  • finance
  • insurance services
  • investment gold

to customers in countries outside the EU


you are making 'specified supplies'.


you make supplies of


  • insurance
  • finance services (including intermediary services)

which are directly linked to the export of goods outside the EU


you are making 'specified supplies' regardless of where the person who receives the supply is established.


you make specified supplies


you may register for VAT on a voluntary basis. Registering for VAT will allow you to claim back any VAT you have paid in respect of the supplies.


you


  • are making this type of supply
  • think you might be able to register

you should phone the VAT Helpline for further information.


2.8 What if I opt to tax my land and buildings?

You can voluntarily opt to tax certain supplies of land and buildings which would otherwise be exempt from VAT. You can find out more about this, and how to do it, in Notice 742A Opting to tax land and buildings. Opting to tax means that you will charge VAT on the supplies you make.

If


then


you opt to tax


you must include the value of the supplies of the land and buildings covered by the option in your taxable turnover when you are deciding whether


  • you are liable to be registered (see paragraph 3.4 of this notice)
  • you wish to register on a voluntary basis (see paragraph 3.9 of this notice).

you are not already liable to be registered for VAT and you


  • become liable to register, or
  • wish to register voluntarily
  • if you are registering online, you must tell us that your business is involved with land or property. You will then be guided to download and complete the necessary forms for an option to tax.
  • if you are registering using a paper VAT 1, you should enclose written notification of your option to tax.

2.9 What if I only supply goods or services abroad?

If


then


  • you have a business establishment in the UK (including a branch or agency)

or


  • you usually live in the UK

and


  • you only make supplies to customers outside the UK

but


  • those supplies would be taxable if you made them in the UK

you can register for VAT on a voluntary basis as long as you:


  • receive taxable supplies from UK VAT registered businesses

or


  • import goods into the UK

and


  • you would be entitled to claim back the VAT on those supplies.

If you think you might be able to register, please phone the VAT Helpline for more advice.

2.10 What if I take a business over from somebody else?

If


then


you take over:


  • a VAT-registered business
  • part of a VAT-registered business

from somebody else, as a going concern


you may be liable to be registered (see paragraph 3.8).


you are liable to be registered


  • your registration date will be the date you take over the business.
  • you may be able to transfer the previous VAT registration number to yourself.

Section 4 tells you how to register for VAT in these circumstances.


the previous owner was not registered for VAT


you should check to see whether you need to register.


Section 3 of this notice will help you.


2.11 What if I have been registered for VAT before?

When you apply to register for VAT, tell us if you:

  • are currently involved
  • have ever been involved

in any other VAT registration.

We can:

  • ask for a payment in advance
  • a guarantee as security

if we think we will have problems collecting money from you. The information you give us when you apply to register will help us decide whether we need to do this.

HMRC factsheet 'Powers to prevent non-payment of tax' explains when we might require security.

2.12 Do I have to register for VAT if I live or work abroad?

If you


then


  • live in this country but carry out part of your business abroad
  • have a place of business in this country but live abroad

you may still have to register.


In these circumstances, you have a business establishment in the UK and would be liable to register subject to the normal rules.


3. Working out whether you need to register

3.1 When do I have to register for VAT?

You have to register for VAT when the total value of your:

  • taxable supplies (see paragraph 2.3)
  • distance sales (see section 6)
  • relevant acquisitions (see section 7)

goes over the current registration thresholds.

You have to register for VAT if you make distance sales into the UK of any excise goods, or relevant supplies (see section 8), in the UK. (In these circumstances, there is no registration threshold).

From 1 December 2012, if you are a non-established taxable person, the registration threshold for taxable supplies will no longer apply to you. See paragraph 9.3 for more information.

You may have to register for VAT if you take over a VAT-registered business as a going concern (see paragraphs 2.10 and 3.8 for further information).

Once you are:

  • registered
  • required to be registered

under any of the above categories, you are a taxable person.

As a taxable person, you must account for VAT on all your:

  • taxable supplies
  • distance sales
  • acquisitions
  • relevant supplies in the UK
  • from the date that you are required to be registered.

3.2 Registration thresholds

For details of past and current registration thresholds please contact the VAT Helpline on telephone: 0300 200 3700, or visit our website at www.hmrc.gov.uk.

3.3 How can I work out when I become liable to register?

You can do this by following the table below. If you meet any of the conditions, you must register for VAT in the UK.

If you make


you are liable to register if


taxable supplies in the UK (see paragraph 2.3)


To calculate the value of your taxable supplies see paragraph 3.4.


  • at the end of any month, the value of your taxable supplies in the previous 12 months or less, is over the registration threshold (unless you expect that the value of your taxable supplies in the next 12 months will not exceed the deregistration threshold)

or


  • at any time, you expect the value of your taxable supplies in the next 30 day period alone, to go over the registration threshold.

distance sales in the UK (see section 6)


at any time during the calendar year from 1 January, your total distance sales go over the distance sales threshold.


If you make distance sales of excise goods such as tobacco or alcohol in the UK, you must register for VAT whatever their value (see paragraph 6.6).


acquisitions in the UK (see section 7)


To calculate the value of your relevant acquisitions, see Notice 725 The Single Market.


  • at the end of any month, the total value of your relevant acquisitions from all other EU states in the year, or part year, from 1 January has gone over the registration threshold

or


  • it is reasonable to assume that the value of the relevant acquisitions you will make in the following 30-day period alone will be over the registration threshold.

relevant supplies (see section 8)


  • you make any relevant supplies in the UK

or


  • at any time you have reasonable grounds to believe you will make relevant supplies within the next 30 days.

3.4 Working out the value of your taxable supplies

If you are making taxable supplies (see paragraph 2.3), you need to know your taxable turnover to find out if and when you need to register for VAT.

Your taxable turnover is the total value of the taxable supplies (including the zero-rated ones) which you make in the UK or Isle of Man. You don't need to include:

  • the value of any capital assets (such as buildings, equipment or vehicles) which you have sold
  • the value of any exempt supplies (see paragraph 2.6)

However, if you have sold land or buildings which are subject to an option to tax, and the sale wasn't zero-rated, you must include it as part of your taxable turnover.

There are special rules for working out your taxable turnover if you are a tour operator and make taxable supplies which:

  • are normally used by travellers, for example, hotel and holiday accommodation or passenger transport
  • you buy in and re-supply to travellers without changing them

Notice 709/5 Tour operators margin scheme explains the rules and tells you how to account for VAT on these supplies if you become registered.

3.5 Working out the value of your distance sales

When you are working out the total value of your distance sales, you can exclude:

  • any new means of transport you have bought
  • any goods which you install or assemble at your customers’ premises

See Notice 725 The Single Market for details of how to account for VAT on these supplies.

3.6 What can I register as?

You can register as a:

  • sole proprietor
  • partnership
  • corporate body
  • club or association

Two or more corporate bodies may apply to register as a single taxable person (VAT group) if they can meet certain conditions.

A corporate body which:

  • is organised in divisions
  • carries on its business in divisions
  • can meet certain conditions
  • apply to register each division separately.

You can find out more about these types of registration in Notice 700/2 Group and Divisional Registration.

3.7 What if I have reached the thresholds but I expect the value of my taxable supplies to go down?

If


then


  • at the end of any month, the value of your taxable supplies for the last 12 months has gone over the registration threshold, but
  • you can provide evidence and explain why the value of your taxable supplies will not go over the deregistration threshold in the next 12 months

you may not have to register, unless you are otherwise required to do so because of the level of your distance sales or acquisitions.


This is called exception from registration.


You must still tell our VAT Registration Service that you have reached the threshold within 30 days of the end of that month, but you will not have to fill any forms in unless we don't allow you exception from registration.


we have allowed you exception from registration


this doesn't mean you will never have to register.


Carry on checking the value of your taxable supplies on a monthly basis to find out whether another liability arises.


The exception we have allowed doesn't create a cut-off date. So make sure you include your ‘pre-exception’ turnover in your calculations.


  • we have allowed you exception from registration
  • you become liable to register again
  • you still meet the criteria

you can apply for exception again.


we don't accept your application for exception


you will be registered for VAT from the day you were otherwise liable to be registered (see paragraph 3.3) and you will need to account for VAT from that date.


So it's in your own interests to send us


  • your application
  • a full explanation

as early as possible.


3.8 Taking over a business as a going concern

If you take over a business (or part of a business) as a going concern from an owner who was, or was required to be, registered for VAT, there are some checks you need to do.

Work out the value of the taxable supplies the business you're taking over made in the 12 months before the transfer.

Add that figure to the value of any taxable supplies you made in the 12 months before the transfer.

If


then


the total comes to more than the registration threshold in force on the day of transfer


you will have to register for VAT from that date, unless you qualify for exemption from registration (see paragraph 3.11).


the total does not come to more than the registration threshold


you won't be required to register at that time.


Carry on including the total in your month-end calculations. Register as normal if, at the end of any month, your total is over the registration threshold.


The person who sells the business to you is responsible for keeping the business records. But they should give you all the information you need to meet your VAT obligations.

Where the VAT registration number is transferred along with the business, you are responsible for keeping the business records.

If


then


the seller asks permission from us to keep the records


you will need to get the information you need to meet your VAT obligations from them.


you can't get the information you need from the seller


you can ask us to disclose the information we hold.


We will tell the seller that you have asked us to disclose the information.


If you want to use the previous owner's VAT number, you and the seller must both notify HMRC separately through HMRC’s online services. Alternatively, you and the seller will need to send us a completed paper copy of Form VAT68.

3.9 Can I register even though I am not liable?

Yes.

If you are not liable to be registered because the value of your:

  • taxable supplies
  • distance sales
  • acquisitions

is below the thresholds, you can apply for voluntary registration.

  • can also apply to register before you start making taxable supplies, distance sales or acquisitions.

You may only register if you are in business. We define business as a continuing activity carried on with the intention of making supplies for a consideration. Non-business activities can include those carried on as a hobby or supplies made in a purely private capacity (for example the sale of personal belongings). The terms business and non-business are explained in greater detail in Notice 700 The VAT Guide.

In some cases, we may ask you to show us that you plan to make taxable supplies.

You can apply for voluntary registration to be backdated up to four years from the current date.

Think carefully about whether registering will really benefit you.

If we agree to register you from an earlier date, you can recover VAT other people charge you in respect of your taxable supplies from that date.

However, you:

  • must also account for VAT on all your reduced-rate and standard-rate taxable supplies, distance sales and acquisitions from that date
  • cannot normally change the date later

If you apply to be registered for VAT, you should follow the instructions in paragraph 4.1.

3.10 Applying for voluntary registration if you make relevant acquisitions

You may apply for voluntary registration if you can show us that you are making, or intend to make, relevant acquisitions, even if the value of those relevant acquisitions is below the threshold.

Paragraph 3.9 gives more information about voluntarily registering for VAT.

Paragraph 7.4 gives more information about registering before you start to make relevant acquisitions.

3.11 Exemption from registration

If


then


all or most of your taxable supplies, or relevant acquisitions, are zero-rated (see paragraph 1.6)


you may not need to be registered for VAT.


This is called exemption from registration.


you want to apply for exemption from registration


you can use HMRC’s online tax registration service.


  • you want to apply for exemption from registration

but


  • VAT is due on some of your supplies

you must be able to show us that, if you were registered, your input tax would normally be more than your output tax.


Input tax is the VAT you pay on the goods and services you purchase for use in the course of your business.


Output tax is the VAT you account for on your taxable supplies.


you make relevant supplies of assets which are zero-rated (see section 8)


You should send us a completed Form VAT1C and enclose a letter confirming your request and explaining why your supplies are zero-rated.


we allow you exemption from registration


you will not be able to reclaim the input tax you pay when you buy goods or services for your business.


you must tell us at any time if your circumstances, including the nature of the supplies you make, change.


This is because you may no longer be entitled to exemption.


we don't accept your application for exemption from registration


you will be registered for VAT from the day you were otherwise liable to be registered (see paragraph 3.3) and you will need to account for VAT from that date.


So you should submit your application for exemption to us with the necessary information as early as possible so that we can reach a decision in good time.


4. How and when to tell us

4.1 How do I tell you?

If you are applying for registration because:

  • your taxable supplies have exceeded the threshold, or
  • you are a non-established taxable person making supplies in the UK

you can use our online application service. You can ask an agent to do this for you. As the person registering, you will still be responsible for the accuracy of the application. The service and full terms and conditions of its use can be found on the HMRC website at www.hmrc.gov.uk.

If your business is a partnership, the online service will ask you for more information.

If you are taking over a going concern and you want to keep the previous owner’s VAT registration number, you and the seller can both notify us separately through the online service.

If you are applying for registration because your turnover has exceeded the registration threshold for:

  • distance sales (VAT 1A)
  • relevant acquisitions (VAT 1B)
  • relevant supplies (VAT 1C)

or if

  • you do not want to use the online registration service

you will need to complete a paper copy of the appropriate form.

If


you may also need to complete Form


your business is a partnership


VAT 2


you are taking over a going concern and you want to keep the previous owner’s VAT registration number


VAT 68


you are appointing a tax representative


VAT 1TR


The forms are available for you to print off from our website at www.hmrc.gov.uk. Please send your completed form, or forms, to our VAT Registration Service. The address is at the back of this notice.

You can see examples of all the forms in section 14.

4.2 When do I have to tell you?

Where you are liable to register because


you must tell us within


at the end of any month


  • the value of your taxable supplies in the last 12 months or less has exceeded the threshold, or
  • the value of your relevant acquisitions has exceeded the threshold

30 days from the end of the month that this occurred.


you expect your taxable supplies or relevant acquisitions in the next 30-day period alone to exceed the threshold


30 days of the date that expectation arose.


the value of your distance sales has exceeded the threshold


30 days of the date this happened.


you make relevant supplies


30 days of making the supply


Where you have reason to believe that you will be making a relevant supply in the next 30 days, you must notify us before the end of this 30-day period.


you are taking over a business as a going concern


30 days of the business being transferred.


4.3 What will my registration date be?

Registration type


If you


your registration date will be the


Taxable supplies


  • have already gone over the registration threshold (see paragraph 3.2)
  • expect to go over the registration threshold within the next 30 day period alone
  • first day of the second month after your taxable supplies went over the registration threshold.
  • date you first expected your taxable supplies to go over the registration threshold.

Distance sales


need to register because the value of your distance sales in the year or part year from 1 January went over the distance sales threshold


date that your sales exceeded the threshold.


Relevant acquisitions


  • need to register because the total value of your relevant acquisitions from all other EU States in the year or part year from 1 January went over the registration threshold
  • think that the value of the relevant acquisitions you will make in the next 30-day period alone will be over the registration threshold
  • first day of the second month after this happened.
  • date you first expected this would happen.

Relevant supplies


  • make a relevant supply
  • expect to make a relevant supply within the next 30 days
  • date of your first supply.
  • the date you first expected to make relevant supplies.
  • if you have made a relevant supply and there were no reasonable grounds for believing that you would do so, then we will register you from the date you made your first relevant supply.

If you must register for taxable supplies and relevant acquisitions, your registration date will be the earlier of the two dates.

4.4 Working out when to tell us - examples

(a) If you make taxable supplies

If


you must complete your online application by


and your registration date will be


your taxable supplies in the previous 12 months went over the registration threshold on 31 August


30 September


1 October


you expect your taxable supplies will go over the registration threshold in the next 30 days alone on 20 January


18 February


20 January


(b) If you make distance sales

If


you must fill in and send us Form VAT1A by


and your registration date will be


the date your distance sales rose above the registration threshold was 15 June


15 July


15 June


(c) If you make relevant acquisitions

If


you must fill in and send us form VAT1B by


and your registration date will be


the date your relevant acquisitions rose above the registration threshold was 31 May


30 June


1 July


the date you expect your relevant acquisitions will be over the acquisition threshold in the following 30 days alone is 20 January


18 February


20 January


(d) If you make relevant supplies

If


you must fill in and send us Form VAT1C by


and your registration date will be


your first relevant supply was made on 22 April


21 May


22 April


on 22 April you expect you will make your first relevant supply in the next 30 days


21 May


22 April


4.5 When will I get my VAT registration number?

When we get your application, we need to check all the details before we can tell you your VAT registration number.

If you have used the online application system, we will send you an online message within three working days which will either:

  • tell you what your VAT registration number is, or
  • let you know there will be a delay because we need more information

If you have sent your application on a paper form, we aim to send your certificate showing your full registration details within 15 working days of receiving the form. Please don't contact us before then or you might delay us processing your application.

The application may take longer to process if we need more information from you.

If you have not heard from us after 15 working days, please contact our VAT Registration Service to make sure that they have received your application.

4.6 What if I don't tell you at the right time?

Regardless of when you tell us, we will register you from the date you were liable to be registered.

You will also have to account for VAT from that date even if you didn't charge it to your customers. You may be able to offset this against any input tax on costs you have incurred and for which you hold VAT invoices, subject to the normal rules (see paragraph 5.2).

If you don't register at the right time, you might get a financial penalty. Section 13 gives more information.

5. Accounting for VAT

5.1 When must I start keeping records and charging VAT?

You must start keeping records and accounting for VAT from the date you become liable to be register.

You may wish to increase your prices to include VAT. Don't show VAT as a separate item on any invoice you issue until you have a registration number. You can explain to your VAT-registered customers that you will be sending them VAT invoices later. Once you have your registration number, you should send them the necessary invoices showing VAT within 30 days.

If you have asked for voluntary registration, you should start keeping records and accounting for VAT from the date you are registered. This will normally be the registration date you asked for on your application form.

Once you are registered, you must account for VAT on all the:

  • taxable supplies (apart from the zero-rated ones)
  • distance sales
  • acquisitions
  • relevant supplies

you make in the UK, regardless of whether those values are above the individual registration thresholds.

For example, if you registered for VAT because your distance sales are above the relevant registration threshold then, once registered, you must account for VAT on all your taxable supplies (apart from the zero-rated ones) and acquisitions in the UK.

Remember, you will have to account for VAT from your registration date. You should submit your application as early as possible so that we can let you have your registration number in good time.

5.2 What about VAT I paid before I registered?

Subject to certain conditions, you can claim back any VAT you are charged on goods or services which you use to set up your business. Normally, this will include:

  • VAT on goods supplied to you for use in your business up to four years before your registration date and which you have not yet sold.
  • VAT on services supplied to you not more than six months before your registration date

We may allow you to backdate your registration voluntarily by up to four years when you apply to register. This will allow you to claim back VAT as per the time limits above.

You should think about this carefully because, once we agree a registration date with you, we will not normally allow you to change that date.

You should include your claim for this VAT on your first VAT return. Notice 700 The VAT Guide tells you how to do this.

5.3 What records do I need to keep?

You need to keep records of all your business sales and purchases. You should also keep a note of all the VAT you have charged and paid for each period covered by your VAT returns. This is called a VAT account.

If you are already in business, you will probably find that your normal business records already provide most of this information.

There is more information about what you need to do in Notice 700/21 Keeping VAT records.

5.4 Is there anything which will help me account for VAT?

Yes. HMRC offers a number of schemes which are designed to make accounting for VAT easier for you:

  • if you sell direct to the public you might be able to account for VAT using a retail scheme. For more information about these schemes, including the special records you need to keep, please see Notice 727 Retail schemes
  • the Cash Accounting Scheme allows eligible businesses to account for VAT on the basis of payments received and made. For more information about this scheme, please see Notice 731 Cash accounting
  • the Annual Accounting Scheme allows eligible businesses to complete a single annual VAT return. For more information about this scheme, please see Notice 732 Annual accounting
  • the Flat Rate Scheme offers eligible, small businesses an alternative to the normal basis of accounting for VAT. If you use the scheme, you won't have to record VAT in your accounts against every purchase and sale. Instead, you can work out the net amount of VAT you need to pay us as a percentage of your total turnover. That turnover includes all your taxable, zero-rated and exempt income. For more information about the scheme, please see Notice 733 Flat rate scheme for small businesses

5.5 What is a VAT return?

The VAT return (Form VAT100) is the document you use to tell us how much VAT you:

  • owe us on your sales
  • are claiming back from us on your purchases

You will also need to tell us the value of the goods you bought and sold during the period of the return. When you submit your VAT return, you should pay any tax you owe. If we owe tax to you, your VAT return will be your claim for repayment.

You will normally have to submit a VAT return every three months. We call the period covered by this return your tax period.

To find out more, please see Notice 700/12 Filling in your VAT return.

We will normally expect you to submit your VAT returns over the internet. There is more information about:

  • this service
  • how you register to use it

on our website and that of the Government Gateway: www.hmrc.gov.uk and www.gateway.gov.uk.

5.6 Can I make returns once a month?

Once you are registered for VAT, if you expect your input tax will be more than your output tax, you can ask us to issue your VAT returns on a monthly basis.

In certain circumstances, we may require you to submit your VAT returns once a month.

5.7 What are outputs and inputs?

These are the sales and purchases you make for your business.

Your sales are your outputs and the VAT you charge on them is your output tax.

If your customers are registered for VAT, your outputs are their inputs and your output tax is their input tax.

In the same way, the VAT which other businesses charge you is your input tax.

You deduct your input tax from your output tax and pay the balance to us. If your input tax is greater than your output tax, you claim the difference back from us.

5.8 Can I have tax periods which match my financial year?

Yes, we can normally arrange this. Ask us when you register.

6. Distance selling

6.1 What is distance selling?

Distance selling is when a taxable person in one EU Member State supplies and delivers goods to a customer in another EU Member State and the customer is not:

  • registered for VAT, or
  • liable to be registered for VAT

We call these customers 'non-taxable persons'. They include private individuals. They also include:

  • public bodies
  • charities
  • businesses which are not registered for VAT because their turnover is below the registration threshold, or their activities are entirely exempt from VAT

The most common example of distance sales is mail order sales.

If you make distance sales in the UK of goods which are subject to excise duty, there are special rules. See paragraph 6.6 for more information.

6.2 How does distance selling work?

If


then


you


  • are registered for VAT in one EU Member State (for example, France)
  • make supplies to customers in the UK

you should account for the VAT on those supplies in France until the value of your distance sales to the UK goes over the UK's distance selling threshold.


the value of your distance sales to the UK goes over the distance selling threshold


you have to register for VAT in the UK and account for the VAT on the distance sales you make to the UK here.


This is because, once you have exceeded the threshold, your distance sales are treated as being supplied in the UK.


6.3 What happens after I register in the UK?

Once you are registered for distance sales in the UK, you have to follow all the usual rules which apply to UK VAT-registered businesses.

You have to:

  • keep a record of all the distance sales you make to the UK
  • issue VAT invoices to all your customers, including those who are private individuals. (For more information about VAT invoices, please see Notice 700 The VAT Guide.)

You also have to account for VAT on all your:

  • taxable supplies
  • acquisitions
  • relevant supplies

in the UK, whether or not the values of those supplies are over the relevant registration thresholds.

6.4 What if I am already registered for VAT in the UK?

If


then


you are already registered for VAT in the UK because


  • the value of your taxable supplies or relevant acquisitions is over the relevant threshold, or
  • you have registered voluntarily

you must account for VAT on your distance sales in the UK even if their value has not exceeded the threshold (see paragraph 3.1).


6.5 What if I make distance sales to more than one Member State?

Once the value of your sales to any Member State goes over that state's distance-selling threshold, you will have to register there separately.

If you are making sales to more than one Member State, you should keep separate records of the value of the sales to each state. This will help you to register in each state at the right time.

You are responsible for making sure you account for VAT to the correct tax authority. You can find a list of addresses for tax offices in other Member States in Notice 725 The Single Market.

6.6 What if I make distance sales of excise goods?

If you


then


sell excise goods such as tobacco and alcohol to customers in the UK from another EU Member State


you must register and account for the duty and VAT due in the UK.


  • is no registration threshold for these sales. You always have to account for excise duty and VAT on these goods in the UK.

6.7 What if I want to make the UK my place of supply?

You can make the UK the place of supply for your distance sales when they are below the UK threshold.

If you want to do this, you will have to register for VAT here. You have to do all these things:

  • tell your own tax authority
  • send us written evidence which shows you have told them
  • use form VAT1A to tell us you want to register here at least 30 days before you make your first supply
  • register for VAT in the UK from the date of the first supply after you opted to account for the VAT here
  • account for VAT in the UK on all distance sales you make here
  • comply with all the usual UK VAT rules - see Notice 700 The VAT Guide
  • normally remain registered in the UK for at least two years

6.8 Can I register in the UK before I start making distance sales?

Yes.

You can also register here before you start supplying excise goods under the distance selling arrangements.

If you want to do this, you will need to:

  • satisfy us that, from a certain date, you have a real intention to make distance sales to the UK and account for VAT here
  • fill in a form VAT1A and send it to us
  • enclose written evidence showing you have made firm arrangements to start making distance sales
  • tell us the date you wish to be registered from and the date you expect to make your first distance sale

If we are not satisfied that you intend to make distance sales in the UK, we may refuse your application.

6.9 What if I don't have a business establishment in the UK?

If


then


  • you don't have a UK establishment

or


  • in the case of a company, you are not incorporated here

you are a non-established taxable person (NETP).


From 1 December 2012, as an NETP, you must register for VAT in the UK if you make any taxable supplies here.

You can find out more about NETPs in section 9. There's more information about agents and tax representatives in section 11.

7. Relevant acquisitions

7.1 What are relevant acquisitions?

If


then


you are an organisation or business and you don’t


  • make, or
  • intend to make

any taxable supplies in the UK


we call any goods you buy from a VAT-registered supplier in another EU Member State to bring to the UK, 'relevant acquisitions'


These arrangements do not apply to


  • services
  • private individuals acting in a purely personal capacity.

This will normally only apply to organisations located in the UK which:

  • use the relevant acquisitions here to make only non-business supplies
  • make wholly exempt supplies

Note: if you register for VAT because you make relevant acquisitions, you won't usually be entitled to claim any input tax on your purchases. This is because you are not making any taxable supplies.

7.2 When must I register and account for VAT?

When the total value of your relevant acquisitions is over the registration threshold, you have to register and account for VAT in the UK. Section 3 tells you about the threshold and how to work out if you need to register.

When you make a relevant acquisition, VAT becomes due from you when you acquire the goods. You should account for it on your VAT return. For more information, please see Notice 725 The Single Market.

If you are not registered for VAT in the UK, you will be charged VAT in the EU Member State where you buy the goods.

7.3 Can I register if I am below the threshold?

Yes. But you should remember that it is unlikely that you will be entitled to claim any input tax on your purchases. Once registered, you will have to comply with the normal UK VAT registration requirements. You must normally remain registered for two clear calendar years after your registration date.

7.4 Can I register before I start making relevant acquisitions?

Yes.

If you want to do this, you will need to:

  • satisfy us that, from a certain date, you will be making relevant acquisitions
  • fill in a form VAT1B and send it to us
  • enclose written evidence showing you have made firm arrangements to start acquiring goods from other EU Member States
  • tell us the date you wish to be registered from and the date you expect to make your first relevant acquisition

7.5 Will I always need to register if I make relevant acquisitions?

No. You will not need to register because of your relevant acquisitions if you:

  • are already registered for VAT
  • are required to be registered because your taxable supplies have gone (or will go) over the registration threshold
  • wish to be registered for VAT and are making (or intend to make) taxable supplies
  • are a private individual buying goods from other EU countries for your own use and not for use in a business of any kind. In these circumstances, you will be charged VAT on the goods in the country you buy them from

8. Relevant supplies of assets

8.1 What are relevant supplies?

A relevant supply is a taxable supply of goods which are assets of a business where:

  • the person making the supply or
  • a predecessor (see 8.2 below)

has

  • received or claimed or
  • is intending to claim

a repayment of VAT under the Eighth or Thirteenth Directive refund arrangements: see Notice 725 The Single Market.

A relevant supply includes the supply of an asset which incorporates parts on which such a repayment has been, or will be, claimed.

An asset includes a capital asset.

8.2 What is a predecessor?

A predecessor is someone who:

  • claimed the repayment of VAT
  • transferred the assets under the Transfer of a Going Concern provisions which allow VAT relief on the transfer of a business or part of a business: see VAT Notice 700/9 Transfer of a business as a going concern

Where there has been more than one transfer, the predecessor may be a person several transfers back. The liability of the assets to be a relevant supply does not change.

8.3 Do I have to register?

You have to register if you:

  • make
  • intend to make

a relevant supply in the next 30 days.

There is no registration threshold for relevant supplies.

The liability to register applies to Non Established Taxable Persons (see section 9)

It also applies to unregistered persons established in the UK who make relevant supplies. They will normally only be affected where a predecessor of theirs made a claim under the Eighth or Thirteenth Directive refund arrangements.

If you are an unregistered person established in the UK, you may be entitled to claim exemption from registration: see paragraph 3.11.

8.4 What if I am already registered for UK VAT?

If you are already registered for VAT, you will not be affected unless you are considering deregistering.

9. Non-established taxable persons (NETPs): basic information

9.1 What is an NETP?

An NETP is any person who is not normally resident in the UK, does not have a UK establishment and, in the case of a company, is not incorporated here.

9.2 What is a UK establishment?

A UK establishment exists if:

  • the place where essential management decisions are made and the business’s central administration is carried out is in the UK

and/or

  • the business has a permanent physical presence with the human and technical resources to make or receive taxable supplies in the UK

We would normally consider a company which is incorporated in the UK to have an establishment here as long as it is able to receive business supplies at its registered office.

9.3 When must an NETP register for VAT in the UK?

From 1 December 2012, if you make any taxable supplies (see paragraph 2.3) in the UK, you must register for VAT here, and account for any UK VAT to HMRC.

9.4 What if I have an establishment in the UK?

If you have a UK establishment, you are not an NETP. You will be registered at the address of your principal UK place of business. Your VAT records and accounts should be kept at this address and be available for us to inspect.

You should ensure that someone responsible for your VAT affairs can be available at the address. If that person is an employee, you should give them written authority to act on your behalf. A suggested form of words for this authority is at paragraph 11.5.

A separate authority will not be required:

  • if the person has been notified to the Registrar of Companies under the Companies Act 1985, Part XXIII as a UK resident authorised to accept service of process on behalf of the company
  • for a partnership, where the person concerned is a partner and is resident in the UK

10. Non-established taxable persons (NETPs): voluntary registration

10.1 When can I register voluntarily as an NETP?

You may be entitled to register in the UK voluntarily and claim back any VAT you have been charged here if you intend to make taxable supplies here more than 30 days in the future. Section 4 explains how to register.

10.2 How do I register voluntarily for VAT?

You may register for VAT voluntarily by:

  • dealing with your VAT obligations yourself
  • appointing an agent to deal with your VAT affairs
  • appointing a tax representative

See section 11 for information on tax representatives and agents.

11. Non-established taxable persons (NETPs): tax representatives and agents

11.1 Appointment and role of a tax representative

If you are an NETP, you may appoint a tax representative.

A tax representative:

  • must keep your VAT records and accounts and account for UK VAT on your behalf
  • is jointly and severally liable for any VAT debts you incur

You may only appoint one person at a time to act on your behalf, although a tax representative may act for more than one principal at any time.

They must:

  • keep separate VAT accounts
  • make separate VAT returns

for each principal they represent.

11.2 What must I do if I appoint a tax representative?

When you register for VAT online, you will be asked for information about your tax representative. You will need to give your representative enough information to allow them to:

  • keep a VAT account
  • make returns
  • pay VAT

on your behalf.

11.3 Will you make me appoint a tax representative?

We can direct some NETPs to appoint a tax representative.

We can not direct NETPs based in countries where certain mutual assistance arrangements exist to appoint a tax representative.

11.4 May I appoint an agent instead of a tax representative?

Yes, you may. Any arrangement you make with someone else to look after your VAT affairs will be subject to whatever contractual agreement you both decide. We cannot hold your agent responsible for any of your VAT debts. We reserve the right not to deal with any particular agent you may choose to appoint. In some circumstances, if we think it's necessary, we may still insist that you appoint a tax representative.

As with the appointment of tax representatives:

  • you may only appoint one person at a time to act as your agent (although an agent may act for more than one principal)
  • you must still fill in the appropriate form to apply for registration (see paragraph 4.1)
  • we will need your authority before we can deal with your agent. In the case of agents, the authority should be in a letter. We've suggested a form of words at paragraph 11.5
  • you will need to give your agent enough information to allow them to keep your VAT account, make your returns and pay VAT on your behalf

11.5 Suggested wording for letter to authorise an agent or employee to act in VAT matters

(Insert principal’s name) of (insert principal’s address) hereby appoints (insert name of UK agent or employee) of (insert address of UK agent or employee) to act as agent for the purpose of dealing with all their legal obligations in respect of VAT.

This letter authorises the above-named agent to submit VAT returns (VAT100) and any other document needed for the purpose of enabling the agent or employee to comply with the VAT obligations of the principal.

Signed (insert principal’s signature)

Date (insert date)

11.6 What if I don't want to appoint a tax representative or an agent?

If you don't want to appoint a tax representative or agent, you must still meet all your obligations under UK VAT law. This includes:

  • registering for VAT at the correct time
  • keeping a record of everything you buy and sell in relation to your business in the UK
  • keeping the records needed to complete your VAT return
  • producing records and accounts to us for inspection
  • keeping a note of all the VAT you have paid and charged for each period covered by your VAT return, and
  • paying the right amount of tax on time

There is more information about keeping records and accounts in Notice 700/21 Keeping VAT records.

12. What happens after I register?

12.1 Help and information for newly registered businesses

After you are registered, we'll send you a letter which will explain how you can book a place on:

  • a workshop to introduce you to VAT
  • one of our Business Advice Open Days

These events are free and will help you understand how VAT works and how it is likely to affect your business. Further information is available from our VAT Helpline.

12.2 Visits by our officers

From time to time, we may need to inspect your VAT records. This is to make sure that you have accounted for the correct amount of tax at the right time. We will normally contact you before we visit to arrange a mutually convenient date and time. We occasionally make unannounced visits: if this happens, the attending officer will explain the reason for the visit.

The officer will:

  • carry the visit out as quickly as possible with the minimum of inconvenience to your business
  • try to deal with any queries you may wish to raise

If you have a business establishment in the UK, we will normally visit you there. You will need to make your books and trading records available at this address. If you have appointed a tax representative or agent, we will normally visit them.

If you:

  • do not have a business establishment
  • have not appointed a tax representative or agent

you will need to make your books and trading records available at our Aberdeen VAT office if we ask for them. We will examine your records at this office and then return them to you.

You can find more about visits from our officers in Visits by VAT officers and in Factsheet General information about compliance checks.

12.3 What should I do if my registration details change?

Please let us know about any changes which affect your VAT registration details. You can find out more about this in Notice 700 The VAT Guide.

You can use our online system to let us know about changes to your:

  • business name
  • principal place of business
  • bank details
  • contact details

or to request

  • a change of stagger
  • deregistration.

To let us know about any other changes, you should write to our VAT Registration Service at Grimsby. You can find the address at the back of this notice. When you write, remember to:

  • include your VAT registration number and address
  • ensure that the registered person signs the letter (for example, if you are a sole proprietor you must sign to confirm the change in details)

This will help avoid any delay in recording the new information.

12.4 What should I do if I change legal entity?

If you change the entity of your business, for example, from a sole proprietor to a partnership or limited company, you must either:

  • apply for a new registration number, or
  • ask to keep your existing number

Section 4 tells you how to let us know that you are liable to be registered.

13. Errors, late notification and fraud

13.1 What if I get my registration date wrong?

It's important to get your registration date right.

If we find out later that you should have been registered from an earlier date, you will have to pay us VAT on the positive-rated taxable supplies you made from the earlier date. We may also charge you a penalty.

13.2 What if I notify you late?

Once you know you are liable to register for VAT, it’s important to let us know straight away.

If you don’t let us know by the proper time, we may charge you a penalty which could be equal to the amount of VAT you should have paid us.

13.3 What if I deliberately avoid registering for VAT?

If you deliberately avoid registering for VAT, you may be liable to a penalty equal to the amount of VAT you should have paid us. For serious offences, the matter will be investigated and we may bring criminal proceedings against you.

14. Example forms

14.1 The following forms published by the Commissioners under Regulation 5 (1) of the VAT Regulations 1995 are those which must be completed if you are required to register for VAT, or may need to be completed when registering, for VAT

VAT 1 - Value Added Tax - Application for Registration

VAT 2 - Value Added Tax - Partnership Details

VAT 1A - Application for Registration - Distance Selling

VAT 1B - Application for Registration - Acquisitions

VAT 1C - VAT Registration Notification

VAT 68 - Request for transfer of a registration number

VAT 1TR - Appointment of Tax Representative

15. List of offices

If you are not using the online registration system, please send standard registration applications to:

HMRC VAT Registration Service
Crown House
Birch Street
Wolverhampton
West Midlands
WV1 4JX

Telephone: 0845 039 0129

Please send applications to register a VAT group or to keep another business’s VAT number to:

HMRC VAT Registration Service
Imperial House
77 Victoria Street
Grimsby
DN31 1DB

Telephone: 0845 039 0279

If you are not using the online registration system, please send applications to register as a Non Established Taxable Person to:

HMRC Non Established Taxable Persons Unit
Ruby House
8 Ruby Place
Aberdeen
AB10 1ZP

Telephone: +44 3000 521260/521261

16. Registration limits

Details of past and current registration limits are available from the VAT Helpline on telephone: 0300 200 3700 or from our website, go to www.hmrc.gov.uk.

Your rights and obligations

Your Charter explains what you can expect from us and what we expect from you. For more information go to Your Charter.

Do you have any comments or suggestions?

If you have any comments or suggestions to make about this notice, please write to:

HM Revenue & Customs
VAT Process Owner Team
1st Floor, Regian House
James Street
Liverpool
L75 1AD

Please note this address is not for general enquiries.

For your general enquiries please phone our Helpline on telephone 0300 200 3700.

Putting things right

If you are unhappy with our service, please contact the person or office you have been dealing with. They will try to put things right. If you are still unhappy, they will tell you how to complain.

If you want to know more about making a complaint go to www.hmrc.gov.uk and under quick links, select Complaints and appeals.

How we use your information

HM Revenue & Customs is a Data Controller under the Data Protection Act 1998. We hold information for the purposes specified in our notification to the Information Commissioner, including the assessment and collection of tax and duties, the payment of benefits and the prevention and detection of crime, and may use this information for any of them.

We may get information about you from others, or we may give information to them. If we do, it will only be as the law permits to:

  • check the accuracy of information
  • prevent or detect crime
  • protect public funds

We may check information we receive about you with what is already in our records. This can include information provided by you, as well as by others, such as other government departments or agencies and overseas tax and customs authorities. We will not give information to anyone outside HM Revenue & Customs unless the law permits us to do so.

For more information go to www.hmrc.gov.uk and look for Data Protection Act within the Search facility.

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