VAT Registration
VAT is one of the most widely discussed terms in the business world, yet it remains among the least understood taxes. Nearly one-third of government revenue in the UK is collected through VAT — Value Added Tax — which was introduced in 1973. VAT influences every part of business, whether products and services are sold online or on the high street. For customers, VAT is seamlessly integrated into the purchase price; however, for businesses, VAT compliance is a legal responsibility, and failing to file returns correctly can lead to severe consequences.
The UK uses three VAT rates depending on the type of product or service:
Standard Rate : 20% – For most products or services.
Reduced Rate : 5% – For certain products or services like home energy, children’s automotive seats, residential property conversions, etc.
Zero rate : 0% – For children’s food and clothing.
Who needs VAT Registration
VAT registration becomes compulsory when a business reaches £90,000 of taxable turnover in a rolling 12-month period. Taxable turnover includes all non-exempt sales, including zero-rated sales. Companies not yet at the threshold are allowed to proceed with business vat registration voluntarily to enhance credibility and reclaim VAT on business purchases.
After completing the business vat registration process, HMRC issues a vat registration certificate containing crucial details like VAT number and the registration date. This vat registration number is required for VAT return filing and official records.
How We Assist With the VAT Process
Because VAT is often misunderstood, our support team simplifies the entire process by assisting with:
VAT registration
VAT return submissions
Correcting errors and assessments
International VAT transactions
Building DIY VAT knowledge for future management
Our guidance ensures your business remains fully compliant and confident throughout VAT operations.
How VAT is Calculated
To calculate VAT-inclusive prices, use a simple multiplier:
For the 20% standard rate → multiply the price without VAT by 1.20
For the 5% reduced rate → multiply the price without VAT by 1.05
This ensures transparency in pricing and makes VAT reporting far easier.
VAT Return Filing Requirements
Following VAT registration, companies must submit VAT returns quarterly via the HMRC online VAT system. Since April 2019, under Making Tax Digital for VAT, VAT returns must be filed digitally through approved software. VAT return filing is critical for tax compliance and applies to companies that qualify for mandatory or voluntary VAT registration.
Penalties for Late VAT Registration
VAT compliance is a legal obligation, and delayed filing can result in serious penalties. HMRC calculates penalty percentages based on how late the registration occurs:
- Late not more than 9 months – 5% Penalty.
- Late more than 9 months but not more than 18 months – 10% Penalty.
- Late more than 18 months – 15%
Penalties are calculated on the VAT amount owed from the time a business should have registered.
Reclaiming VAT
Businesses may reclaim VAT on purchases used exclusively for business purposes — such as office furniture, computers, business travel costs, and professional services. VAT cannot be claimed on personal expenses or entertainment costs. VAT reclaims are processed through the quarterly VAT return by calculating the difference between VAT paid and VAT charged.
Although the reclaim process includes exceptions and exclusions, expert handling makes VAT compliance easier and more beneficial for business growth.
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