Vat Registration

Vat Registration

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.

Who must register for VAT?

Any trading entity that exceeds the VAT threshold in any financial year must register for VAT and this includes:

  •   A private limited company
  •   A limited liability partnership
  •   A sole trader or individual
  •   A club or society

I need to register for VAT, how do I do that?

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:  

  •  One document bearing a photograph:
    •   Passport
    •   Driver’s licence
    •   Government issued identity
  •  Two documents to further authenticate your identity which can include:
    •   Birth certificate
    •   Marriage/civil partnership certificate
    •   National Insurance number
    •   Rental or lease agreement in your own name
    •   Mortgage statement
    •   P60/P45 or similar from an employer that bears your name, and date of birth
Once we have received this documentation and the completed registration form, we will thoroughly check these before submission to HMRC on your behalf.

How can I order the VAT registration service and how much does this cost?

You can order this service directly from our website or, if you would prefer to seek further advice, please email us at [email protected]

The one-off cost of the VAT registration service is £59.99.

Can you briefly explain how VAT is calculated?

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.

FREQUENTLY ASKED QUESTIONS

We will always spot any errors or omissions before submitting your application to HMRC and will immediately contact you to rectify this so that the submitted application is complete and accurate in all respects.
It is a legal requirement, not an option, for your company to register for VAT when its turnover reaches the current threshold. Furthermore, once you register for VAT you will be able to claim back all the VAT that you pay on all purchases that the company makes that includes a VAT element.
You must register for VAT within 30 days of your turnover either actually reaching the VAT threshold or if you expect it to do so within the next 30 days.
The date of registration will be considered to be the date on which the company met the VAT registration threshold and therefore the company will be liable to pay all that is owed from that date to which interest may be added.

Furthermore, HMRC may impose a penalty for late registration.
If your company exceeds the VAT threshold which automatically triggers the obligation to register for VAT but you have good reason to believe, and evidence to support this, that the threshold is unlikely to be met again, HMRC may consider a request for exemption from registering for VAT

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