Registering and Unregistering for VAT

Registering and Unregistering for VAT

The ins-and-outs of VAT registration, deregistration, VAT 7 forms, and handy VAT software tools

By Marcia Smith

How do I register my business for VAT?

If you’ve considered your legal obligations and the pros and cons of voluntary registration, and decided to register for VAT, there are a few steps you’ll need to take in order to do so.

First, gather the relevant information. You’ll need...

You’ll have to declare any businesses you’ve recently acquired or been involved in during the preceding two years.

Register for HMRC Online Services. It’s worth doing this now, as you’ll be required to submit your quarterly VAT returns online. Partnerships must also submit paper VAT2, which you can download from the site.

A registration certificate should be issued to your VAT online account within two weeks (complex cases can take up to six months). This shows your VAT number and your ‘effective’ date – either when you crossed the turnover threshold for compulsory registration, or when you requested voluntary registration. It'll tell you when to submit your first return and payment.

Until you receive your certificate, you won’t be able to show VAT on invoices, but will be required to repay it from your effective date, so adjust your prices and keep careful accounts for the interim.

It’s simple if you’re a straightforward case, but some businesses still need to register on a downloadable paper form, and this option is open to everyone. It’s also not a bad idea to look through the paper version to check you’ve all the necessary details before applying online. Alternatively, if you have a tax agent or decide to engage one, they can handle all this on your behalf.

Using a VAT 7 form to unregister for VAT

If you’re no longer eligible to be VAT registered, then it’s important you cancel your VAT registration. For example, if you join a VAT group or cease to trade or produce supplies that are VAT taxable, you must cancel your registration.

Fortunately, it’s relatively straightforward to do. It’s possible to cancel your VAT registration by sending a completed VAT 7 form to HMRC through the post.

You’re also able to cancel your registration online, which may well be both quicker and easier. Once you’ve logged on to the HMRC website with your business logon, click through to the ‘Services you can use’ page. Then select ‘Change registration details’, then ‘Activate or access online services.’

Once you click ‘Request VAT Deregistration’, the website will offer a list of the most common reasons why people need to cancel their VAT registration. You need to choose a reason and answer any questions that follow. If the reason you’re deregistering isn’t listed, you must write to HMRC explaining your situation.

Deregistration can be delayed by any length of time up to three months and HMRC will automatically display the earliest date by which you can be deregistered.

If you’re in need of rapid deregistration, then applying on the last day of the month can result in HMRC proposing the first day of the following month, i.e. the next day, as a deregistration date. Otherwise it may take a week or more before a verdict is posted in the customer communications section.

What are the best tools for VAT record keeping?

Keeping accurate and up-to-date VAT records is an essential part of running a successful business.

VAT records must be kept for at least six years. The two most common ways of recording VAT figures are keeping a special accounting book or using one of the many software programs currently available to record your figures. Different programs offer different advantages. Some pieces of software can be used on mobile devices, meaning you’ll always have your records to hand. Others are stored online, saving valuable space.

A list of suggested software programs can be found on the HMRC website.