Do I have to apply to HMRC to become VAT registered and charge VAT?

Posted 17/06/2019

Yes. If you want to charge VAT on your invoices and reclaim VAT on your expenses, then you must register with HMRC. Registering with HMRC can help your business to look bigger and more professional; the VAT number should be added to your letterheads, invoices and other correspondence documents. Additionally, you may find some suppliers will not trade with you unless you are VAT registered.

You may not have to be VAT registered if you don’t want to; if your turnover is less than £85,000 over the last year and will not exceed this amount in the next month. You may still decide to voluntarily register despite this particularly if you purchase large amounts of expenses that have VAT applied on them so you can set these off against your sales VAT. When you register for VAT, HMRC will send out a certificate to confirm your registration. This will have your VAT number on and should be kept safely for the duration of your VAT registration. Any invoices you issue must clearly show the VAT calculation on the charge of your service on all invoices. You cannot pick and choose to exclude VAT on an invoice for a customer, unless the service you provide is exempt from VAT per HMRC’s regulations.

The VAT payment you will need to make every quarter (or monthly if you submit a VAT return each month) is the different between the VAT charged on your sales less the VAT paid on your expenses. HMRC will request that you send the details in, along with the total net amounts of the sales invoices and purchase orders, to them just before you make the payment. This form is commonly referred to as the VAT Return, and with Making Tax Digital the submission process now requires the use of Cloud bookkeeping software.

Many popular Cloud bookkeeping software allows the VAT return to be calculated at the click of the button from data entries, and once reviewed to be directly sent to HMRC using the gateway log in information you use to view your online HMRC VAT status. You will need to ensure that you use a bookkeeping system that allows direct submissions of VAT returns for this to work. It is ideal to shop around as most of the software packages incur a monthly fee and not every provider will have the content and applications to suit your needs in the software. Utilize the free trials available. Every programme offers the same basic tools, but some are more specialised for certain professions and the layouts and ease of use can vary so you will find one that you prefer to continue using.


Tags: VAT, business set up, HMRC regulations