What is a VAT number?

Updated on May 23, 2022

A photo of a man writing his VAT registration

If so, have you typed “What is a VAT number?” into the search engine? There is no doubt that they are difficult to understand. VAT registration, VAT kinds, and how to invoice with VAT are all things you’ll want to be familiar with when it comes to your organisation.

Nevertheless, who has the time to comb through countless government guidance pages and articles? You’re not likely to be the only one. As a result, we’ve already done the research for you and assembled all the information you’ll need in one convenient location for you. As an example, let us take you through the following steps:

What is a VAT number, and how do I get one?

Whether or not a VAT number is required for your company

How to get a VAT number for your business

Exactly what data you’ll be expected to supply

In how much time can you expect to receive your VAT number

Tax invoices prior to registering for VAT

Prior to VAT registration, invoicing

Nevertheless, let’s begin with the fundamentals first…

What is a VAT number?

Value added tax identification number is what is known as a VAT number. Businesses that have a VAT number are required to add VAT to the prices of their products and services. Businesses can then claim back the VAT they paid on their purchases.

Does my business need a VAT number?

Fortunately, it’s simple to determine whether or not your company needs a VAT number. A business must register for VAT in the UK if its VAT taxable revenue exceeds £85,000 or is expected to do so in the near future. A company’s taxable turnover includes all sales that are not excluded from VAT.

Exempted from VAT by the UK government are:

Insurers, lenders, and credit card companies all fall under this umbrella.

Continuing education and professional development.

philanthropic events

Subscription fees for membership organisations

Commercial real estate sales, leasing, and letting (this can be subject to change)

Due to the nature of the products or services they provide, some businesses may be excused from this requirement entirely. Voluntary registration may be an option if you anticipate exceeding the VAT taxable threshold. After exceeding the limit, if you register, you’ll have to pay what you owe.

You can ask for an exception to the limit if your business is only temporarily over the limit by contacting HMRC.

A photo of receipts for vat on food and drink

 How to get a VAT number?

This is fantastic news for UK businesses: HMRC registration is simple and quick online for the vast majority of UK firms. All you have to do is:

Your annual revenue, business activity, and bank account information are all included.

Your date of birth

To complete your VAT registration, you’ll need to enter the aforementioned details and create a Government Gateway account. Then, you’ll be ready to submit all of your future online VAT returns.

Do I have to register myself?

If you don’t want to deal with the trouble, hiring an accountant is a completely acceptable option. A designated accountant is permitted by the UK government to handle all of your tax returns.

How long does it take to get a VAT number once I’ve registered?

A “certificate” will be mailed to you within 30 working days of registering. The process may be prolonged if they need to double-check anything. Your Government Gateway account will receive the certificate after it has been issued.

What do I do while I wait for my VAT number?

The majority of the time, folks get it incorrect here. Normally, you’d expect to begin charging VAT only after obtaining your VAT certificate. In reality, however, this is not the case at all. With or without a tax number, the date you register is the date you must begin charging VAT.

As a result, VAT invoices cannot be issued during this time period. We’ll go into more detail about it later.

What do I do once I’ve received my VAT number?

As of now, it’s all over. What do you need to do now that you’ve registered for VAT?

All non-VAT-exempt products and services should be charged the regular 20% VAT rate.

Your purchases from other companies should be subject to VAT.

Every three months, submit your online VAT returns.

As a result of all this, it’s important to make sure that your VAT charges and your VAT payments are in balance, and that if there are any substantial variances, you get this money back when you file your return every few months.

A photo of a woman filling vat returns

Invoicing and VAT registration

If your invoice is invalid in any way, you will not be able to collect VAT back from HMRC. Invoicing can be difficult, but getting it right is critical. There is a lot of information you need to know in order to get your money back.

Invoicing while waiting for my VAT number

Instead of emphasising the VAT on an invoice, they recommend that you just increase your pricing to incorporate the typical UK VAT rate of 20%..

Here’s a case in point:

Normally, this item would cost you £13.15.

Instead of putting the invoice at £13.15, you add 20% and put it at £15.78.

Make the invoice total £15.78, but don’t explain how you arrived at that figure.

Once you’ve obtained your VAT number, you’ll be able to give your customer an updated invoice that clearly states the VAT amount.

Invoicing once I’ve received my VAT number

There are three things you must do in order to ensure that you are entitled to your VAT claims, according to government standards.

As a first step, make sure to issue and maintain track of all valid invoices, whether in paper or digital form.

The second step is to keep track of all sales invoices, even if they have been cancelled, even if they have not yet been paid.

Keeping receipts for the goods and services you acquire is the third thing you should do.

Invoicing with VAT as a small business

For many small business owners, this is their first time dealing with an invoice. You can submit a personalised and professional invoice via the SumUp App in just a few clicks since SumUp has launched SumUp Invoices.

Visit the SumUp blog for additional practical advice on streamlining your company’s operations.