VAT Registration

The Value Added Tax Act 1994 is a UK tax law, concerning taxation of goods and services that fall within the scope of Value Added Tax (VAT)

VAT (Value Added Tax) is a sales tax and has nothing to do with profit.

Every business regardless of if you are a Sole Trader, Partnership, Limited Liability Partnership, or limited company the VAT registration process is the same.


The VAT registration trigger is that when you have sales in any 12-month period totalling over £90,000 then you must register for VAT, and this is done by setting up or logging into your government account.

When assessing your turnover, you take the first 12 months (January to December) and if your sales have reached over £90,000 then you must register for VAT immediately.

If your sales for the first 12 months are under £90,000 then you need to apply this to the next 12 month (February to January) and keep doing this and making sure that you don’t exceed the VAT registration threshold.

You must register if you realise that your annual total VAT taxable turnover is going to go over the £90,000 threshold in the next 30 days.

You must register by the end of that 30-day period. Your effective date of registration is the date you realised, not the date your turnover went over the threshold.


On 1 May, you arrange a £100,000 contract to provide services. You’ll be paid at the end of May. You must register by 30 May. Your effective date of registration will be 1 May.

Penalty for Late Registration

If you register for VAT late, then you may be charged a penalty and interest by HM Revenue & Customs.

The penalty is worked out as a percentage of the VAT due (output tax less input tax), from the date when you should have registered to the date when we either received your notification or became fully aware that you were required to be registered. The rate of penalty depends on how late you were in registering:

 Then the penalty rate will be
not more than 9 months late5%
more than 9 months but not more than 18 months late10%
more than 18 months late.15%

There is a minimum penalty of £50.

VAT Notice 700/41 is a good place to start.

Voluntary Registration

You can register for VAT voluntary at any time, when you start of your business, and you know you will reach the VAT registration limited very quickly.

You may also trade under the VAT threshold but decide to register so you don’t ever run the risk of late registration.

VAT Returns

You must choose how often you are going to submit VAT Returns, and these can be:

  • Monthly
  • Quarterly
  • Annually

VAT Schemes

There are many VAT schemes, and you need to choose one which best suits your needs, and they are:

  • Cash Accounting Scheme
  • Standard Scheme
  • Flat Rate Scheme
  • Annual Accounting Scheme
  • Tour Operators Margin Scheme
  • Capital Goods Scheme

If you need help or want more information on VAT registration, please contact us:

Call 07795 425032

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