Whether we’re providing a product or service or buying into a product or service, VAT is something we’ll all be familiar with. However, many individuals remain unaware of how you become VAT registered.
Business owners should understand VAT and how to register for it. It’s a legal requirement to register for VAT if you meet the criteria. To learn more about how to become VAT-registered, we encourage you to continue reading.
What is VAT?
What is VAT? VAT (value-added tax) is a type of tax that’s added to many products or services at the standard VAT rate of 20%.This form of tax is assessed at each stage of the production process and doesn’t follow a permanent rate.
VAT depends on the value of the service or product during the process, from production to distribution and ultimately the end sale. UK VAT is typically paid by the consumer rather than the business – customers’ VAT isn’t regarded as a tax on individual businesses.
Regardless, businesses are still required to pay VAT to HMRC – although this is covered by the customer’s purchase. Essentially, this means that VAT is an indirect tax. It’s the responsibility of the business to report details of VAT to HMRC.
If a business doesn’t report details of VAT, then it could face investigations and penalties. Most businesses follow very similar VAT processes, but charities tend to have slightly different rules and regulations. The main taxable areas for most businesses include:
- Commission earned
- Business assets sold
- Staff sales
- Exchanges (new products for old products)
- Loan or hire of goods
- Business goods used for personal use
When to Register for VAT
So, when is best to register for VAT? According to HMRC, you need to register for VAT if:
- Your total VAT-taxable turnover for the last 12 months was over £90,000 (the VAT registration threshold)
- You expect your turnover to go over £90,000 in the next 30 days
You can also choose to register for VAT if your turnover is less than £90,000 – this is known as a voluntary registration.
Exceeding the Threshold in the Last 12 Months
You must notify HMRC that you need to register as soon as you expect to exceed the VAT threshold – or when you notice that you have exceeded the VAT threshold.
If you expect that your VAT-taxable turnover will exceed the threshold of £90,000 in the next 30-day period, then you need to notify HMRC within 30 days. This means that you’ll be VAT registered from the date that you made the prediction.
For example, if you take an order of £86,000 on January 1st that’s expected to be delivered in the next two weeks, you should let HMRC know by January 14th, but you’ll be VAT registered from January 1st.
If you don’t register with HMRC for VAT or register late, you could face investigation and penalties. Your VAT will be back-dated with HMRC, meaning you’ll owe HMRC the VAT on your income within the unregistered period.
Becoming VAT-Registered
Becoming VAT is essential for most businesses in the UK. Registration is a straightforward process – you can register for VAT online or by post.
The stages of becoming VAT-registered are simple, and all you’ll need to do to get started is create an account online using your government gateway ID. Depending on the business type, you’ll need to provide some key information to HMRC.
Limited Companies
Limited companies will need to provide a range of information. It’s important to have this information to hand, including:
- Company registration number
- Business bank account details
- Unique taxpayer reference
- Annual turnover
Individual or Partnership Companies
If you’re an individual sole trader or part of a business partnership, you’ll also need to provide HMRC with some important information while registering for VAT online, including:
- National insurance number
- Identification (passport or driving licence)
- Bank account details
- Unique Taxpayer Reference (if you have one)
- Annual turnover
Additionally, you might also be asked about information regarding self-assessment tax returns, PAYE, payslips, or your P60. GOV.UK revealed that by March 2023 last year, there were 277,441 new VAT registrations.
Once you’ve successfully registered, you’ll be given a VAT registration number and a VAT registration certificate, along with important information about submitting your first VAT return and payment and a registration confirmation date.
Can You Reclaim VAT?
Can you reclaim VAT? Yes, VAT-registered businesses can claim VAT – but only on business-related purchases. If certain items are also used for personal use, you’ll still only be able to claim the business portion of the VAT.
For example, if you use the same phone for both business and personal use, you’ll likely be able to reclaim 50% of the VAT (which is the portion used for business purposes).
Dealing With VAT at LJS Accounting Services
HMRC requests that all VAT returns and records be up-to-date under the Making Tax Digital rules. At LJS Accounting Services, we ensure our clients are up to date with their VAT returns. We complete all returns in a compliant manner, ensuring there are no issues with HMRC.
Our expert team of friendly professionals can help in several areas regarding VAT by preparing and submitting your returns following deadlines, controlling your bookkeeping, and producing monthly or quarterly reports, to name a few.
To find out more about our VAT and bookkeeping services, we encourage you to get in touch with a member of our team today. We look forward to speaking soon.

Keli Evans, Director at LJS Accounting Services, excels in taxation and statutory accounts. With a focus on strong client relationships, she leads a diverse portfolio, overseeing vital financial aspects like VAT, payroll, pensions, and taxation with a holistic and committed approach.