What Happens After I Register for VAT

What you receive after registering for VAT

Once your VAT registration is approved, HMRC will send you:

• A VAT registration certificate, which confirms your VAT number.

• The effective date of registration, which is the date you became liable to charge VAT.

• Your first VAT return period, showing when your first return is due.

• Information about using Making Tax Digital (MTD) for VAT submissions.

You will receive this certificate through your HMRC online account, typically within two to four weeks of submitting your application. Keep this document safe, as you will need your VAT number for invoicing and correspondence.

Start charging VAT on your sales

From your effective date of registration, you must start charging VAT on all taxable sales. The standard VAT rate is 20%, though some goods and services are charged at 5% or 0%, and others are exempt.

If you made taxable sales after your registration date but before receiving your VAT number, you must still charge VAT. In this case, issue invoices without VAT initially and reissue them later once your number is confirmed.

Make sure to:

• Update your invoicing system to include your VAT number.

• Show VAT separately on invoices.

• Keep copies of all sales invoices and credit notes.

Failing to charge VAT correctly can lead to underpayment or penalties, so it is important to apply it from the correct date.

Reclaiming VAT on purchases

As a VAT-registered business, you can reclaim VAT you have paid on business expenses and purchases, known as input VAT.

You can usually reclaim VAT on:

• Goods and services used for business purposes.

• Equipment, stock, and materials purchased after registration.

• Some pre-registration purchases if they were for business use.

To reclaim VAT, you must have valid VAT invoices from your suppliers. Keep all receipts and ensure the VAT amounts are clearly shown.

Pre-registration VAT

You can reclaim VAT on certain purchases made before your registration date:

• Goods purchased up to four years before registration, if you still use them in your business.

• Services purchased up to six months before registration.

You claim this VAT on your first VAT return.

Submit VAT returns and pay VAT to HMRC

Once registered, you must submit VAT returns normally every three months to report how much VAT you have charged and paid.

Your return will show:

• Output VAT (VAT charged to customers).

• Input VAT (VAT paid on purchases).

• The difference, which you either pay to or reclaim from HMRC.

Most businesses file VAT returns through Making Tax Digital (MTD) using compatible accounting software. HMRC no longer accepts manual or paper VAT submissions for most businesses.

Deadlines

• VAT returns are usually due one month and seven days after the end of each VAT period.

• Payment must also reach HMRC by the same deadline.

Late filing or payment can result in interest charges or penalties, so it is important to track your deadlines carefully.

Record-keeping requirements

HMRC requires VAT-registered businesses to keep detailed records for at least six years. These include:

• Sales and purchase invoices.

• VAT account records showing how figures were calculated.

• Import and export documentation.

• Copies of submitted VAT returns.

• Digital records if using MTD software.

Your records must be accurate, complete, and available for inspection if HMRC requests them.

Choosing the right VAT scheme

After registration, you can choose from several VAT schemes to simplify administration or improve cash flow. A VAT accountant can help determine which one suits your business best.

Common options include:

• Standard Accounting Scheme: Report VAT on invoices issued and received.

• Cash Accounting Scheme: Pay and reclaim VAT only when payments are received or made, which can help with cash flow.

• Flat Rate Scheme: Pay a fixed percentage of your turnover instead of tracking input VAT, designed for small businesses.

• Annual Accounting Scheme: File one VAT return per year, making interim payments throughout the year.

Each scheme has specific eligibility criteria and benefits depending on your turnover and type of business.

Managing your VAT payments

You can pay your VAT bill through:

• Direct debit (recommended for convenience).

• Bank transfer or debit card via your HMRC account.

• Online banking or corporate credit card (if applicable).

Setting up a direct debit ensures payments are made automatically and on time.

If your VAT return shows you are owed a refund, HMRC typically processes it within 10 working days.

Dealing with VAT inspections

After registering, HMRC may carry out VAT inspections to check your compliance. These are routine and help ensure your returns are accurate.

To prepare for an inspection:

• Keep organised records and invoices.

• Reconcile your VAT account regularly.

• Ensure your software is MTD-compliant.

If errors are found, HMRC may require you to amend your return or pay any underpaid VAT. However, being transparent and cooperative can help avoid penalties.

Getting help from a VAT accountant

VAT can be complex, especially for new businesses. A VAT accountant can help by:

• Setting up your accounting system correctly.

• Ensuring you charge and reclaim VAT properly.

• Submitting VAT returns on time.

• Advising on VAT schemes and compliance.

• Representing you during any HMRC queries or inspections.

Their expertise can save you time, prevent errors, and ensure your VAT position is managed efficiently.

Final thoughts

After registering for VAT, your responsibilities increase, but so do your opportunities to manage cash flow more effectively. You must charge VAT on sales, reclaim it on eligible purchases, and file accurate quarterly returns through Making Tax Digital.

By maintaining clear records, meeting deadlines, and seeking professional advice when needed, you can stay compliant and make VAT work smoothly for your business. A proactive approach will keep you in HMRC’s good books and allow you to focus on growing your business with confidence.