3rd November 2023VAT registration goes fully digital

From 13th November, businesses and agents must register for VAT online as part of HMRC’s Making Tax Digital strategy.

In this article, Mike Block, VAT Director at HW Fisher explains who needs to register for VAT, the information that is needed to sign up, and next steps for those who are unable to register online.

“As of the 13th November, all businesses and agents are required to register for VAT via HMRC’s online portal unless they have been deemed exempt. In theory, this should reduce the burden on HMRC’s telephone helpline, make VAT applications easier and minimise delays for businesses to get their VAT number. However, this could be daunting for some businesses as it will be the first time that they are having to complete the process digitally.”

What is VAT and who needs to register?

VAT (Value Added Tax) is a tax added to most products and services sold by VAT-registered businesses. The standard rate of VAT is 20%, however some goods and some services are exempt or eligible for a reduced rate. You can find details of these goods/services on HMRC’s website.

You must register for VAT if the total VAT taxable turnover of your business was more than £85,000 in the last 12 months or less, or if you expect your turnover to go above £85,000 in the next 30 days alone.

If the turnover of your business is less than £85,000, you can still opt to register for VAT. This is known as voluntary registration.

You also need to register for VAT if you and your business are both based outside of the UK, but you supply goods that are already in the UK or you supply goods or services directly to consumers in the UK. This is regardless of your turnover, as overseas businesses must register as soon as they start to make supplies in the UK.

How do I register and what information will I need?

It depends on the type of business that you own. If your business is a Limited Company, you will need to share the company name, the personal details for one director, its turnover, the nature of the business, bank account details, the Company Registration Number and Unique Tax Reference (UTR) number. You will also need to give details about its Corporation Tax and Pay As You Earn (PAYE).

If you are an individual or partnership, HMRC will need your date of birth, your National Insurance number, your UTR number, home address, turnover and nature of your business, and your bank details. You will also need to share payslips, your P60 and your Self Assessment.

What if I can’t register online?

While 95% of businesses are already registering for VAT digitally, HMRC must still accommodate businesses that do not operate online at all.

If you are a business that needs to complete your registration by post, you can request the paper VAT1 form by calling the VAT helpline. You don’t need to apply for an exemption in advance, but be prepared that HMRC may ask you why you want to register by post.

If you would like to discuss your business’ VAT obligations, please reach out to Mike Block.