What you need to know about business VAT registration with HMRC

Spread the love

Since Making Tax Digital for VAT (MTD for VAT) is live, firms with a taxable turnover above the VAT registration threshold of £85 000 must comply with the new rules. Below, we answer some of your key VAT questions.


Q1: Under which conditions must I register for VAT with HM Revenue and Customs (HMRC) ?

You must register for VAT if:

1) You expect your VAT taxable turnover to be more than £85,000 in the next 30-day period

2) Your business had a VAT taxable turnover of more than £85,000 over the last 12 months


VAT registration under different scenarios:


  • You sell goods or services that are VAT exempt and am based in Northern Ireland

Even though you only sell goods or services that are exempt from VAT or ‘out of scope’, you still need to register for VAT when you buy goods for more than £85,000 from EU VAT-registered suppliers to use in your business.


  • You  took over a VAT registered business

You may have to register for VAT.


  • Your business is based outside the UK

There’s no threshold if neither you nor your business is based in the UK. You must register as soon as you supply any goods and services to the UK (or if you expect to in the next 30 days).


Q2. What are exceptions to registering for VAT ?

You can apply for a registration ‘exception’ if your taxable turnover goes over the threshold temporarily.


Q3.How to apply for VAT registration exception?

Write to HMRC with evidence showing why you believe your VAT taxable turnover will not go over the deregistration threshold of £83,000 in the next 12 months. HMRC will consider your exception and write confirming if you get one. If not, they’ll register you for VAT.


Q4. What are the consequences or penalties of being too late with registering for VAT?

If you register late, you must pay what you owe from when you should have registered.


You may get a penalty depending on how much you owe and how late your registration is.


Q5. How to calculate VAT taxable turnover and what to include?

VAT taxable turnover is the total value of everything you sell that is not exempt from VAT.

To check if you’ve gone over the threshold in any 12-month period, add together the total value of your UK sales that are not VAT exempt, including:

  • goods you hired or loaned to customers
  • business goods used for personal reasons
  • goods you bartered, part-exchanged or gave as gifts
  • services you received from businesses in other countries that you had to ‘reverse charge’
  • building work over £100,000 your business did for itself

Include any zero-rated items – only exclude VAT-exempt sales, and goods or services you supply outside of the UK.


Q6. Can I register for VAT voluntarily?

You can register voluntarily if your business turnover is below £85,000. You must pay HMRC any VAT you owe from the date they register you.


Q7. What are VAT registration thresholds?

The thresholds for registering for VAT  from 1 January 2021 are as follows:


Circumstance Threshold
VAT registration More than £85,000
Registration for distance selling into Northern Ireland More than £70,000
Registration for bringing goods into Northern Ireland from the EU More than £85,000
Deregistration threshold Less than £83,000
Completing simplified EC Sales List £106,500 or less and supplies to EU countries of £11,000 or less


Source: gov.uk


Get the latest VAT information directly in your inbox and stay up to date with all VAT developments around the world.

You have Successfully Subscribed!