Debitoor's accounting dictionary
VAT registration

VAT registration – What is VAT registration?

VAT registration is the process of listing your business with the government as active in production and sales.

Debitoor makes it easy for VAT-registered companies to manage their taxes. Find out more about VAT registration and Debitoor.

After a business registers for VAT, it's able to reclaim any VAT paid on company purchases and becomes responsible for:

  • Charging VAT on any goods or services sold (and charging the right amount!)
  • Paying any VAT due to HMRC
  • Submitting VAT Returns
  • Keeping VAT records and a VAT account.

Companies registered for VAT will be issued a unique VAT registration number. This number should be included on sales invoices and is required for the reverse charge procedure for taxable sales between EU countries.

Do I need to register for VAT?

In the UK, companies with a turnover of more than £85,000 are required to register for VAT. Your taxable turnover is the total value of all taxable sales you make throughout the tax year. Sales that are exempt from VAT do not count towards your taxable turnover.

Most businesses can register for VAT online. It's also possible to register for VAT through an accountant or by post.

Voluntary VAT registration

Many small businesses and start-ups have a turnover under the £85,000 VAT registration threshold but still choose to register for VAT. There are pros and cons of voluntary VAT registration, and the decision to opt-in volutarily very much comes down to your particular business, as well as your own personal preferences.

The advantages of voluntary VAT registration for entrepreneurs and small businesses include:

  • You can reclaim some of the VAT on the goods and services purchased by your business
  • As your business grows, you may reach a turnover of £85,000. If you preemptively register for VAT before reaching this threshold, you could save the time and hassle of adjusting your prices to include VAT rates.

Some of the disadvantages of voluntary VAT registration for entrepreneurs and small businesses might be:

  • When you start charging VAT, it’s common practice to include the tax in your prices. Your products or services will therefore appear more expensive for the end user.
  • Once you are registered for VAT, you will need to file VAT Returns, keep VAT inoices and receipts, and maintain VAT accounting records.

VAT Registration and Debitoor

Debitoor invoicing software makes it easy to manage your company finances, whether or not you're registered for VAT – simply turn VAT on and off in your account settings.

VAT-registered companies can activate VAT in their account settings to add VAT to invoices, adjust VAT rates for different products, and submit VAT Returns directly to HMRC from their Debitoor account. Try our Making Tax Digital software free for 7 days.

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