How to Apply for VAT

If you decide to register your business for VAT, you can fill out the application online at GOV.UK. This will allow you to register for VAT and create a VAT online account (also known as a Government Gateway account). This will be required when submitting your VAT returns to HMRC (see below).

Alternatively, 1st Formations offers a low-cost VAT Registration Service for £39.99 plus VAT. The service includes the following:

access to a VAT registration expert to answer your questions during the preparation and submission of your VAT registration application to HMRC

confirmation of your VAT registration number instructions for creating your own HMRC Government Gateway account in order to activate your VAT registration online

HMRC may take up to three weeks to process your application. During this time, you should begin keeping records, accounting for VAT, and keeping all relevant invoices and receipts.

VAT Registration Service - £39.99 + VAT

However, you cannot begin charging VAT or showing it on invoices until HMRC issues you a VAT registration number.

You can, however, adjust your prices to reflect the amount of VAT you intend to charge, and then issue VAT invoices to customers once you have received your VAT number.

Returns on VAT

If it is within your budget, appointing an accountant to prepare and submit VAT returns and handle VAT affairs on your behalf may be beneficial.

VAT returns are typically submitted online every three months. These returns must be sent to HMRC within one month and seven days of the end of the VAT period.

VAT payments must be made electronically to HMRC. The VAT payment deadline is usually the same as the VAT return filing deadline.

That's all there is to it!

We've discussed the concept of voluntary VAT registration, as well as its benefits and drawbacks. We've also discussed how to register a business for VAT and how to file VAT returns.

Whatever path you take regarding VAT registration, we always recommend that you seek professional advice from an accountant.

Benefits of Voluntary VAT Registration

VAT registration, whether voluntary or mandatory, provides numerous benefits:

VAT can be claimed on the majority of goods and services purchased from other businesses.

Your customers who are VAT registered will be able to reclaim the VAT from HMRC. Your prices will remain competitive, and you will be able to recoup the VAT on your expenses.

Small businesses can appear larger and more established than they are. Customers, lenders, investors, and suppliers may find this very appealing because they will assume the company's turnover exceeds the VAT registration threshold.

An organization's VAT number is assigned to it if it is VAT-registered. This can be printed on invoices, letterheads, websites, and other business stationery. Again, this may appeal to other businesses, many of which may be unwilling to do business with a non-VAT registered entity because it is deemed too small.

Voluntary registration can be backdated up to four years if HMRC receives sufficient evidence. This means that a company may be able to reclaim VAT on equipment that is still in use.

VAT registration will compel you to keep more accurate records, which will be beneficial to the operation of your business in the long run.

The Cons of Voluntary VAT Registration

While VAT registration has a number of advantages, there are some disadvantages to be aware of:

VAT may reduce the appeal of goods and services to non-VAT registered customers, particularly if the final cost of sale is deemed unreasonable or overpriced.

Businesses may face a sizable VAT bill from HMRC if they generate more VAT from goods and services sold than they pay in VAT on goods and services purchased from other businesses.

Additional paperwork and administration are unavoidable side effects of VAT registration. Businesses must keep all VAT invoices and receipts, keep VAT accounting records, and file quarterly VAT returns (i.e., every three months)