What Is a VAT Number: What You Need to Know

If you’ve ever googled ‘what is a VAT number?’ The results were probably more than a little intimidating. When it comes to running a business, you need to be well-versed in VAT registration, VAT types, and how to invoice with VAT. This guide will explain what a VAT registration number is, the benefits, and how to get one.

What is a VAT number?

VAT numbers are a unique identifier provided by HMRC to businesses when they register for VAT. In the UK, the number is nine digits long and always begin with ‘GB.’ An example of a UK VAT number could be GB 987 6543 21.

How To reclaim VAT

An invoice is the best place to go when looking for another company’s invoice. If the company is VAT registered, its unique ID should be displayed on all invoices. If there is no registration number on the invoice they offer, you should quickly contact them.

Benefits

Your VAT number can be shown on invoices or websites, making your business appear more desirable to potential clients.

If you sell to VAT-registered firms, they can reclaim the VAT from HMRC, keeping your selling price competitive and allowing you to recover the VAT on your costs.

• Being VAT registered helps your company appear larger  because the current threshold for compulsory registration is £85,000
  
• They determine the customer’s tax status.

Who needs one?

If your company’s VAT taxable revenue exceeds £85,000, you must register. It is also possible to register voluntarily. The following items have been excluded from VAT by the UK government(and could be subject to change):

• Insurance
  
• Finance
  
• Credit 
  
• Commercial land 
  
• Education and training
  
• Charity fundraising events 
  
• Membership organisation subscriptions
   
• Lettings of buildings

How to get a VAT number

Any business can register for VAT online through the government’s website. You can then submit your VAT returns online. Many choose instead to hire an accountant to deal with the paperwork on your behalf. The UK government allows you to choose an accountant to handle all of your tax returns on your behalf. 

What to do whilst you wait for your VAT number

This is where most individuals make mistakes. You’d expect that once you’ve received your VAT certificate, you can start charging VAT. This is not the case. The date you register is the date you are to begin charging VAT, whether you have a number or not.

What to do when you receive your VAT number

The aim of all of this is to make the amount of VAT you charge and the amount you pay balance each other out, and that if there are any significant differences, you receive this money back when you file your return every few months.

What happens now that you’ve registered for VAT? 

• Begin charging the standard UK VAT rate of 20% on all your goods and services.
  
• Pay VAT on all goods and services purchased from third parties.
  
• To keep track of your VAT payments, file online VAT returns every quarter.