Value added tax is the tax that is added to goods and services that are provided or sold in the UK and which currently stands at 20%.
Providing your company’s turnover is more than £85,000 for the 2021/21 financial year, then you must register for VAT. This threshold can, and often does, change every year so it is important to be aware of the current threshold and whether your company’s turnover will reach or exceed this in the relevant financial year. For the purpose of the VAT registration threshold, this refers to the level of turnover, i.e. sales, and not profit.
When a company registers for VAT with HM Revenue and Customs, it will be issued with a VAT registration number and will be obliged by law to submit regular VAT returns, paying any tax due after deducting any VAT that it can legitimately claim on its own purchases from other suppliers.
Any trading entity that exceeds the VAT threshold in any financial year must register for VAT and this includes:
If you prefer not to register for VAT with HMRC directly yourself, 121 Company Formation offers a VAT registration service for limited companies which will take approximately two to three weeks to complete.
We will send the necessary registration forms to you electronically which you will need to complete and return to us with the following documentation:
You can order this service directly from our website or, if you would prefer to seek further advice, please email us at
The one-off cost of the VAT registration service is £59.99.
When you calculate the cost of the goods and services you have supplied to a customer and raise an invoice, you must add the VAT element (currently 20%) to the subtotal to arrive at the total amount payable for the invoice. This is the output VAT that you must pay to HMRC.
However, you will also have received invoices from suppliers that you have purchased goods and services from and these will also contain the VAT element which is the amount that you can claim back from HMRC. Therefore the total VAT payable in any given period is the amount of VAT you have charged on sales less the amount of VAT you can claim back on purchases.
121 Company Formation offers a VAT return service which will take much of the burden of filing VAT returns from you, allowing you to concentrate on more important aspects of running the company.
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