This the voluntary VAT registration package is for UK-residents only, who have own business address in the United Kingdom, personal National Insurance number, & a bank account with a UK Bank or Building Society.
With this UK VAT registration package we will provide the following services:
Filing a UK VAT application with HMRC;
Submitting supporting information to HMRC (if requested by HMRC officer);
The certificate of VAT registration will be send by post.
£104.99
No annual charges
The private company formation with Barclays or HSBC bank account & VAT registration package for UK-residents, who have a valid business address in the United Kingdom.
This company formation with VAT registration offer includes:
The certificate of incorporation;
The memorandum & articles of association;
The fast-track corporate bank account with HSBC or Barclays & the VAT registration;
Certificates of a company formation & the VAT registration will be send by post.
£800.00
Annual fees from £500.00
This the voluntary VAT registration package is for non-UK residents only, who does not have own business address in the United Kingdom, and personal National Insurance number.
With this VAT registering package we will provide the following services:
Appointing us as your VAT tax agent;
Filing a UK VAT application with HMRC;
Submitting supporting information to HMRC (if requested by HMRC officer);
The certificate of VAT registration will be send by post.
£150.00
No annual charges
Coddan will apply for an EORI registration number to be granted to your business where here you are involved in customs activities. Companies who do not hold a valid EORI registration yet, cannot act as importer or exporter.
With this EORI registering package we will provide the following services:
Filing a UK EORI application with HMRC;
Submitting supporting iformation to HMRC (if requested by HMRC officer);
The certificate of EORI registration will be send by post.
Further Information
Value Added Tax VAT is a tax charged on most business transactions made in the UK or the Isle of Man. Value Added Tax (VAT) is a general consumption tax assessed on the value added to goods and services. It is a general tax that applies, in principle, to all commercial activities involving the production and distribution of goods and the provision of services. It is a consumption tax because it is borne ultimately by the final consumer. It is not a charge on companies. It is charged as a percentage of price, which means that the actual tax burden is visible at each stage in the production and distribution chain. It is collected fractionally, via a system of deductions whereby taxable persons (i.e., VAT-registered businesses) can deduct from their VAT liability the amount of tax they have paid to other taxable persons on purchases for their business activities. This mechanism ensures that the tax is neutral regardless of how many transactions are involved. If you wish to register for VAT, a VAT registration form needs to be completed. We can provide all of the necessary assistance to complete this form efficiently and accurately. We can also advise you with regard to supporting documentation, such as copy invoices and contracts, that you may need to submit to HM Customs with your registration form. Specialised UK VAT registrations for non-UK businesses: the requirement to register for VAT is determined mainly by your business trade and not necessarily the country where your business resides. You may be required to register your company for VAT because you have draw down stock in the UK, or trade over the Internet. We can help you to register and can assist with the preparation and submission of your VAT Returns. If you are a UK business and you travel to another European Union member country on business, you may be entitled to recover VAT on some of your expenditure.
Businesses that are registered for VAT will normally receive a VAT Return (Form VAT 100) each quarter. The Return asks for details of what the company has bought and sold in that period (the tax period). The company must pay any tax owed (or claim repayment if a rebate is owed). The VAT Return and any tax owed must reach HM Customs and Excise (Customs) by the date shown on the Return. This is known as the due date. It is possible to arrange tax periods to fit in with the company's financial year by writing to the VAT office with Form VAT 1. Payment and accounting for VAT is monitored by VAT Central Unit (VCU). Payment of VAT due can be made by cheque, postal order or credit transfer.
The VAT Return (Form VAT 100) contains a declaration that the information given is true and complete. Signing a Return knowing that it is false could result in a criminal prosecution. This would include understating output tax or overstating input tax by a significant amount. Before signing the Return therefore, it is advisable to check it carefully for completeness and accuracy. This check is often best carried out by someone who was not involved in preparing the Return. The signatory must be a responsible person (eg the proprietor, director, etc).
The form should be completed in ink, writing one amount (or none) in each box. Negative figures should be in brackets. The Return should reflect all transactions recorded in the VAT account and any required annual adjustments should be declared. Mistakes should be corrected by crossing out the figure, writing in the correct figure and initialling the amendment. If payment is enclosed with the completed Return, ensure that the payment box has been ticked. Before sending the Return, check that it has been signed and dated.
When to Register for VAT? Value added tax (VAT), is a sales tax levied on the sale of goods and services. In some countries, including Singapore, Australia, New Zealand and Canada, this tax is known as 'goods and services tax' or GST. VAT is an indirect tax, in that the tax is collected from someone other than the person who actually bears the cost of the tax. Personal end-consumers of products and services cannot recover VAT on purchases, but businesses are able to recover VAT where they use the supplies that they receive that bear VAT to make further supplies that also bear VAT. In this way, the total tax levied at each stage in the economic chain of supply is a fraction of the value added by a business to its products, and most of the cost of collecting the tax is borne by business, rather than by the state. VAT was invented because very high sales taxes and tariffs encourage cheating and smuggling.
A common VAT system is compulsory for member states of the European Union. The EU VAT system is imposed by a series of European Union directives, the most important of which is the Sixth VAT Directive, Directive 77/388/EC. Nevertheless, member states have negotiated VAT exemption or variable rates for regions or territories. The Canary Islands, Ceuta and Melilla (Spain), Gibraltar (UK) and Aland Islands (Finland) are exempt from VAT, while Madeira (Portugal) is allowed to levy variable rates.
Under the EU system of VAT, where a person carrying on an economic activity supplies goods and services to another person, and the value of the supplies passes financial limits, the supplier is required to register with the local taxation authorities and charge its customers, and account to the local taxation authority for, VAT (although the price may be inclusive of VAT, so VAT is not paid in addition to the agreed price, or exclusive of VAT, so VAT is payable on top of the agreed price). In the UK, Customs and Excise is responsible for administering VAT.
If you are in business and you are making taxable supplies you must consider whether you have a liability to register for VAT. It is important that you register at the correct time. Value Added Tax VAT is a tax businesses charge when they supply their goods and services in the United Kingdom or Isle of Man. It is also charged on goods, and some services, that are imported from places outside the European Community EC and on goods and services coming into the UK from another EC Member State. Your taxable supplies, distance sales, or acquisitions are expected to exceed £67,000 in the next 30 days, or if you are already trading, and they have exceeded £67,000 in the past 12 months. Alternatively, if you have taken over a VAT registered business as a going concern. Then: you must notify your Customs and Excise local VAT office immediately of liability to register for VAT.
If you require further guidance or advice, you should refer to the relevant VAT Notices or contact the Coddan CPM Business Advice Centre. A person who is not obliged to register can choose to do so. He has to satisfy HMRC that he is carrying on a business, or intends to carry on a business, and that he is making taxable supplies. Satisfactory evidence will need to be provided. Usually a covering letter is helpful, to pre-empt any questions that HMRC may wish to ask. As many as 20% of all VAT registered businesses fall into this category. The principle advantage lies where a business deals mainly with other VAT registered businesses, as it can claim input tax to which it otherwise would not be entitled. Let us know how we can help.
Coddan offers fixed fee for the complete UK private limited company formation with annual account & return preparation & filing it with Companies House and HMRC.
The description of our package in brief:
A company registration with Companies House & HMRC;
The provision of a registered address & opening a bank account;
The preparation & filing of annual account.
Our business start-up package is ideal for customers, who need a monthly bookkeeping, and the preparation of the final year-end account & its submission with Companies House & HMRC.
Our business and accounting start-up services include:
The registration of a company;
The registered office address;
Display of a company name;
A nominee secretary;
A business bank account;
The provision of a tax agent with the HMRC;
A monthly bookkeeping service;
The PAYE scheme registration;
The preparation & filing annual return & annual account.
ALL-INCLUSIVE
This package is ideal for such customers, who needs to appoint Coddan to deal with the bookkeeping & VAT requirements during the financial year.
The registration of a company & and the provision of registered office address in London.
The provision of a nominee secretary & opening a bank account.
The VAT registration & the provision of the tax agent service.
The keeping of the VAT & bookkeeping records with its submission & timely registration with CH and HMRC.
What is the VAT Number? VAT Registration Online, Value Added Tax Registration Service
The value added tax (VAT) is the tax charged on most business transactions made in the United Kingdom or in the Isle of Man. The value added tax (VAT) is a general consumption tax assessed on the value added to goods and services. It is a general tax that applies, in principle, to all commercial activities involving the production and distribution of goods and the provision of services.
It is a consumption tax because it is borne ultimately by the final consumer.
It is charged as a percentage of prices, which means that the actual tax burden is visible at each stage in the production and distribution chain. It is collected fractionally, via the system of deductions whereby taxable persons (i.e., VAT-registered businesses) can deduct from their VAT liability the amount of tax they have paid to other taxable persons on purchases for their business activities.
This mechanism ensures that the tax is neutral regardless of how many transactions are involved. If you wish to register for VAT in the United Kingdom, a VAT registration form needs to be completed.
We can provide all of the necessary assistance to complete the VAT registration form efficiently and accurately. We can also advise you with regard to supporting documentation, such as copy invoices & contracts, that you may need to submit to the HMRC with your VAT registration form.
Coddan is specialised in UK VAT registrations for non-UK located businesses, the requirement to register for the VAT is determined mainly by your business trade & not necessarily the country where your business resides. You may be required to register your company for the VAT because you have drawn down stock in the United Kingdom, or trade internationally over the Internet.
We can help you to register for the VAT and can assist with the preparation and submission of your VAT returns. If you are a UK located business & you travel to another European Union member country on business, you may be entitled to recover VAT on some of your expenditure. Each European country has different rules about which expenses are recoverable and the rules can be complex.
We can assist you to assess any VAT refunds and can compile and submit these claims to the relevant tax authority.
It currently takes around a month for HM Revenue & Customs (HMRC) to process applications for VAT registration, although it can take longer (up-to six month) if they need to carry out additional checks. To avoid delays or even the rejection of your VAT application, you need to provide details of your current business account, a copy of the lease agreement, or other document, which can confirm the real place of business.
For an example, you company may have a registered office from us in London, but the real place of business is located in Cumbria, you need to be ready to confirm your address to the HMRC upon their request.
HMRC can also ask for copies of incoming VAT invoices from your current service providers, and ask details of your potential customers with the copies of your pro-forma or VAT invoices. However, the British system for starting up a limited company is outlined based on companies having the UK-based clients or have prospective clients.
The VAT registration can be a difficult process for limited companies having no clients or prospective clients yet.
Ready Made Company With VAT
When time is essence and you want to get right into action, it may be preferable for you to look at the solution of buying a pre-packaged company with a pre-assigned VAT number for you to get your business kick started. We offer you solutions tailored to suit your requirements when you are looking for buying a limited company with VAT already obtained. Contact us to see how we can assist you, or click here to read more...
Running a Limited Company: What is the VAT?
Ready Made Company with VAT
When time is essence and you want to get right into action, it may be preferable for you to look at the solution of buying a‘pre-packaged company with a pre-assigned VAT number for you to get your business kick started. Some of the advantages you may have in considering such an option are:
Acquiring the ownership of a company registered in the UK soil or falling within other jurisdictions;
If such a company has the legal characteristic of a limited company, you can get all the documents which you could evaluate before closing in one after going through the commercial history;
You have a single stop solution, which helps you in minimising the loss of time especially the ones which you may otherwise require to spend with bureaucracy and also handling and transfers of various titles.
We, at Coddan offer you solutions tailored to suit your requirements when you are looking for buying a limited company with VAT already obtained.
Such of those who are interested to offer their limited company with VAT registration, please do get in touch with us.
Related Articles
VAT is a tax that's charged on most business transactions in the UK. Businesses add VAT to the price they charge when they provide goods and services to: -
Business customers; for example a clothing manufacturer adds VAT to the prices they charge a clothes shop;
Non-business customers; members of the public or 'consumers' - for example a hairdressing salon includes VAT in the prices they charge members of the public.
If you're a VAT-registered business, in most cases you: -
Charge VAT on the goods and services you provide;
Reclaim the VAT you pay when you buy goods and services for your business.
If you're not VAT-registered then you can't reclaim the VAT you pay when you purchase goods and services.
Doing Business in the United Kingdom: Rates of VAT
There are different VAT rates, depending on the goods or services that are being provided. Currently there are three rates: -
Standard rate 20 per cent;
Reduced rate 5 per cent;
Zero rate 0 per cent.
The standard rate of VAT is the default rate - this is the rate that's charged on most goods and services in the UK unless they're specifically identified as being reduced or zero-rated.
You Need to Know About Starting a Business: Items Not Covered by VAT
There are some items that aren't covered by VAT. These items are either: -
Exempt;
Outside the scope of VAT.
You Need to Know About Running a Business: Outside the Scope of VAT
There are some things that aren't in the UK VAT system at all - they're outside the scope of VAT. They are not taxable supplies and no VAT is charged on them. Items that are outside the scope of VAT include: -
Non-business activities like a hobby - for example, you might sell some stamps from your collection;
Fees that are fixed by law - known as 'statutory fees' - for example the congestion charge or vehicle MoT tests.
How and When to Register for VAT: Who Can Register for VAT
You can register for VAT if you're in business and you are one of these: -
An individual sole-trade or sole-proprietor;
A partnership, including a limited liability partnership;
A private company limited by shares, or a company limited by guarantee;
A club;
An association;
A charity;
Any other organisation or group of people acting together under a particular name, such as an educational or health institution, exhibition, conference, etc.;
A trust.
Unique Offer: Readymade Company 35 Years Old
We have a unique offer, a readymade company with the trading history in the past, and such company registered in 1978! That means you have an opportunity to buy a shelf company, which is 35 (thirty-five years old), by acquiring such company you can create a long established image of a business history. Imagine, how many clients will prefer to do business with a company which is 35 years old, rather than with a newly registered business! Contact us to see how we can assist you.
Should You Register for VAT? Who Can Not Register for VAT
You can't register for VAT if either of these is true: -
You sell only goods or services that are exempt from VAT;
You aren't in business according to the definition that HM Revenue & Customs (HMRC) uses for VAT purposes.
Limited Company Formation: What Business is for the VAT Purposes?
You can only register for VAT if you're in business. HMRC defines a business as a continuing activity involving getting paid for providing goods or services - in money or another form of payment such as in-kind or barter. You are in business when, for example: -
You earn an income by carrying on a trade, vocation or profession - by being self-employed or through another entity such as a limited company;
You provide membership benefits as a club, association or similar body in return for a subscription or other form of payment;
You provide certain other activities as a club or other recreational body, charity or other non-profit making body;
You charge admission to a premises.
To be in business, these activities must have a degree of frequency and scale and be continued over a period of time. Even if your activities have some or all the characteristics of a business, they may not be considered a business for VAT purposes if they are essentially a recreation or hobby, or an isolated transaction.
Becoming a UK & EU Registered Importer
All commercial importers must have a unique EORI number. Those that do not currently have one, will have to obtain one from HM Revenue and Customs. In most cases, the EORI application will normally be processed within five working days. We strongly recommend that you submit your EORI application well in advance of when you wish to use the EORI number to avoid delays at import or export. Contact us to see how we can assist you, or click here to read more...
So if you only make occasional VAT taxable supplies, or your supplies are minimal, it may be that you don't need to register for VAT. The one-off or infrequent sale of your personal belongings at a car boot sale or auction, for example, would fall into this category - but buying goods for resale on a regular basis is definitely a business activity.
VAT Registration: You are Doing Business in the UK, or Intend to Start a Business in the United Kingdom
If your real place of business is in the UK or you live here, you may need to register for the VAT, or you may be able to choose to register voluntarily, if you are doing any of the following kinds of business in the UK: -
Supplying goods or services within the United Kingdom: if your turnover of VAT taxable goods and services supplied within the UK for the previous 12 months is more than the current registration threshold of £79,000, or you expect it to go over that figure in the next 30 days alone, you must register for VAT. However, if your turnover has gone over the registration threshold temporarily then you may be able to apply for exception from registration - see the section later in this guide for more information.
Taking over a VAT-registered business from someone else: you have to add your own VAT taxable turnover over the last 12 months (if any) to that of the business you're taking over. If the total goes over the registration threshold on the day of the takeover (currently £79,000), you'll have to register.
Receiving goods from other countries in the European Union (EU): if you have received goods from other EU countries in the UK (these are known as acquisitions) with a total value greater than £79,000 in the current year since 1 January, or you expect to acquire more than that value in the next 30 days alone, you must register for VAT.
When Can I Register Voluntarily as an NETP?
An NETP is any person who is not normally resident in the UK, does not have a UK establishment and, in the case of a company, is not incorporated here. You may be entitled to register in the UK voluntarily and claim back any VAT you have been charged here if you intend to make taxable supplies here more than 30 days in the future. Contact us to see how we can assist you, or click here to read more...
If Your Trading is Below the Threshold for VAT Registration
If you are carrying out one or more of the business activities described above but you haven't crossed the registration threshold, you can still apply to register for VAT voluntarily, it might be of benefit to you.
If You Have Gone Over the Threshold for VAT Registration Temporarily
You can apply for exception from VAT registration if: -
(i) You have to register for VAT because the value of your taxable supplies in the previous 12 months has exceeded the registration threshold of £79,000 (including the value of supplies made by a VAT-registered business that you have taken over). (ii) You can demonstrate to HMRC that in the longer term you will only be trading below the de-registration threshold of £77,000. (iii) You can ask the HMRC if they can make an exception, and allow you not to register for VAT, by sending them a letter, stating why you are applying for an exception. The letter should provide evidence and explain why the value of your taxable supplies will not go over the deregistration threshold in the next 12 months.
If the HMRC agrees to make an exception and allow you not to register this time, you must let them know of any relevant change in circumstances, for example, if your turnover goes over the threshold again. If HMRC does not agree to make an exception, you will become registered for VAT from the day you should have been registered. You will need to account for VAT from that date.
If You Don't Live in the UK or Your Place of Business is Not in the United Kingdom
From 1 December 2012 the UK VAT registration threshold will no longer apply to you. Your registration date will be the earliest date that either: -
(i) You make any taxable supplies here; (ii) You expect to make any taxable supplies here within the next 30 days.
You must register as a non-established taxable person (NETP). You should also need to appoint a tax representative or tax-agent (such as Coddan) to keep the VAT records and accounts on your behalf.
VAT Registration for Non-UK Residents
If you are running a UK registered company but do not have the real place of business in the UK, or you do not have your own office in the United Kingdom, the HMRC will reject your application, because you do not have a place to keep the VAT records & place for the VAT inspection visits. An alternative is to register through an agent, such as Coddan at our address. Contact us to see how we can assist you, or click here to read more...
Starting Business in the United Kingdom: You Supply Goods to the UK from Abroad, or Intend to Start Import to Great Britain
You may need to register for VAT, or you may be able to choose to register voluntarily, if you are doing any of the following kinds of business in the UK: -
Supplying and delivering goods from another EU country to non VAT-registered customers in the UK. If you sell and deliver goods (or arrange for their delivery) from another EU country to customers in the UK who aren't registered for VAT and don't have to be registered, this is known as distance selling. Common examples are mail order and Internet sales.
If the value of your distance sales in the calendar year from 1 January goes over the distance selling threshold, currently £70,000, you must register for UK VAT. You can also register voluntarily, if you are trading below the threshold or you intend to start trading.
Supplying and delivering excise goods from another country. If you sell and deliver goods from another country that are liable to UK Excise Duty (such as tobacco or alcohol) to UK customers, then you must register for VAT in the UK. There's no threshold - everyone must register.
If you have to register for one of the reasons described above, but you don't live in the UK or have a place of business here, then you must register as a Non-Established Taxable Person (NETP). You may also want to appoint a tax agent or representative to keep VAT records and accounts on your behalf - that's up to you.
The UK has always allowed its domestic VAT registration threshold (currently £77,000) to apply to NETPs who make taxable supplies in the UK, as well as to UK businesses. NETPs include, for example, non-UK traders at farmers’ markets or Irish service suppliers working across the land border. However, a decision (Schmelz C-97/09) in the CJEU (the European Court of Justice) has confirmed that only businesses established in a Member State can benefit from its domestic VAT registration threshold. Therefore, a new Schedule 1A to the VAT Act 1994 and other consequential changes were made in Finance Act 2012 and come into force on 1 December 2012.
From 1 December 2012, any non-established business which makes or intends to make taxable supplies in the next 30 days has 30 days from the date it formed that intention to notify HM Revenue & Customs (HMRC) that it is required to register for VAT. Businesses which become required to register in the UK on 1 December 2012 will have to notify HMRC of that fact by 30 December 2012.
A business not established in the UK will be required to register from the earliest of the date that it made or expected to make taxable supplies in the UK (but no earlier than 1 December 2012). Non-established businesses which are aware that they will need to be registered from 1 December 2012 (for example, because they are already making supplies in the UK under the current threshold) can provide advance notice to HMRC, and they will be registered for VAT from 1 December 2012.
Existing UK place of supply rules have not been changed. Overseas businesses making only reverse charge supplies of services to the UK will not normally be affected by the removal of the threshold. However, there are some exceptions that are taxable supplies in the UK where they are supplied to a private customer rather than to a business, for example, services in connection with land which is located in the UK or entertainment services when the performance takes place in the UK.
Overseas businesses only involved in distance sales or acquisitions are not affected by the removal of the VAT registration threshold.
You Supply Goods or Services from the UK to Other Countries
If you supply goods and services both inside and outside the UK, then you may need to register for UK VAT if the value of your UK supplies alone exceeds the registration threshold.You don't need to include supplies you make in other countries when calculating your VAT taxable turnover for registration purposes - so leave out of your calculation any goods and services you supply where the place of supply is another country rather than the UK.
Registering for VAT: Distance Selling
If you supply and deliver goods - or have them delivered, for example by mail or another delivery service - to customers in other EU countries who are not registered for VAT and don't have to be registered, this is known as distance selling. If you are required to register and account for VAT on distance sales in another EU country then you don't include the value of those distance sales when working out whether you need to register for UK VAT.
VAT Voluntary Registration: Benefits of Voluntary Registration
There are potential cashflow advantages of being able to charge VAT on your sales and claim back VAT on your purchases, which you may benefit from depending on your circumstances. For example: -
If you sell zero-rated items and buy standard-rated items you would receive a VAT refund from HMRC;
If you have not yet sold anything or don't sell anything during a VAT accounting period, you may still be able to claim VAT back on your purchases.
If you're thinking about registering voluntarily, you might want to check the rules for reclaiming VAT on purchases made before registration since it is often possible to reclaim some of the VAT you are charged on goods or services that you use to set up your business. You can apply to backdate your voluntary VAT registration by up to four years. You will have to account for VAT on any VAT taxable supplies you've made after your chosen date, and you won't be able to reclaim any VAT on your purchases unless you have the right evidence, and meet the other conditions for reclaiming VAT.
As soon as you apply for the vluntary VAT registratyion, within a few days or a couple of weeks you will receive the VAT application questionnaire. To complete such questionnaire you need to provide the following information about your company: business phone number, business address (except of registered office address, which can be confirmed by the Lease Agreement, or your own billing address if you are planing to work from home), business fax number, business banking account details, number of employers.
You also will need to provide information where your company is doing business, as well as few incoming and outgoing invoices (from/for behalf of your company).
Company Formation & VAT Registration: Responsibilities of Voluntary VAT Registration
If you decide to voluntarily register for VAT, you have exactly the same responsibilities as someone who must register.
You must keep all required VAT records and issue VAT invoices. You also have to complete and submit a VAT Return at regular intervals, along with your payment if one is due.
The following three factors play a part in determining whether or not you need to register: -
VAT Registered Companies: VAT Taxable Supplies
The supply of any goods and services, which are subject to VAT at any rate, including zero-rated, are called taxable supplies.
Registered Limited Companies With VAT Number: VAT & Distance Sales
Distance selling is when a taxable person in one European Community (EC) Member State supplies and delivers goods to a customer in another EC Member State and the customer is not: registered for VAT, or liable to be registered for VAT. The most common example of distance sales is mail order sales.
Acquisitions: if you are an organisation or business, and not a private individual acting in a purely personal capacity, any goods you buy from a VAT registered supplier in another EC country for removal to the UK are known as acquisitions.
If your taxable supplies, distance sales, or acquisitions are expected to exceed £77,000 in the next 30 days, or if you are already trading, and they have exceeded £77,000 in the past 12 months, or, if you have taken over a VAT registered business as a going concern. Then you must notify your Customs and Excise local VAT office immediately of liability to register for VAT. If your taxable supplies, distance sales, or acquisitions are not expected to exceed £77,000 in the next 30 days, and have not exceeded £77,000 in the past 12 months, then the VAT registration is not necessary in these circumstances although businesses can register for VAT on a voluntary basis to be able to reclaim VAT on purchases.
Limited Company With VAT Registration: Important VAT Requirements
When your company becomes VAT registered you must comply with the VAT regulations that affect your business. It is beyond the scope of this guide to provide a full analysis of the VAT regulations that affect a given business however here are a few of the key requirements: -
When you sell goods or services that incorporate a VAT charge you must supply your customer with a VAT invoice. Generally the VAT invoice should include the VAT amount paid, your companies VAT registration number, a unique invoice number and the date the invoice was raised.
You must retain all VAT records including invoices and receipts for a 6 year period. These may be required by law. Remember that a VAT receipt for a purchase you have made through your business is a right to claim back the VAT paid, without this you legally have no right to claim back the VAT.
You must notify HM Revenue and Customs within 30 days if any of the details for your company change.
You must charge VAT on supplies made to the company's employees or inter-company transactions.
You should not claim back VAT on personal expenses.
Do Not Avoid Registering for VAT by Artificially Separating Business Activities
If you run more than one business, the sales in all those businesses must normally be added together to determine whether or not you must register for VAT.
However, if you are involved in the running of several separate legal entities, you may not need to combine the sales of those businesses to find whether you need to be VAT-registered. If HMRC decides that you have artificially separated one business into smaller parts to avoid registering for VAT, it can decide that the entire business is a single taxable person and therefore must be registered for VAT. Situations that HMRC may consider a single taxable person for VAT purposes include: -
Separate entities selling to registered and unregistered customers. The VAT-registered entity sells only to VAT-registered customers, and the entity not registered for VAT sells to customers who are not registered for VAT.
The same equipment or premises being used by different entities on a regular basis. The premises and/or equipment are owned by one of the parties, who charges rent to the others. This situation may occur in businesses such as launderettes and takeaway food operations.
Splitting up what is usually a single sale. This is common in industries such as the bed and breakfast trade, where one business supplies the bed and another the breakfast.
If you deliberately avoid registering for VAT, you may be liable to a penalty. For serious offences, the matter will be investigated and you may be prosecuted.
VAT Registration When You Take Over a Going Concern
A business is a going concern if it is a business that is live or operating, or sufficient preparatory work has taken place, and the business will continue after it is sold. Even if you have not taken over any assets at all you may still have taken over the business for the purposes of VAT registration. For example, if you rent premises from the owner of a public house or restaurant and you continue to run the pub or restaurant you will be liable to register for VAT based on the previous publican's or restaurateur's VAT taxable turnover.
VAT Registration at the Time of the Transfer
If you're not already registered for VAT, then to find out if you have to be registered, add your own VAT taxable turnover over the previous 12 months (if any) to that of the VAT-registered business you're taking over. If the total exceeds the registration threshold (currently £79,000), you'll have to be registered for VAT from the day of the transfer.
There's an exception to this. If you can show that you expect the combined turnover in future to be below the deregistration threshold (currently £77,000) - for example, because you won't be opening for the same number of hours - you don't need to register. Even if you don't have to be registered for VAT at the time of transfer, you can choose to register voluntarily. If your registration is in place at the time of the transfer, you won't be charged VAT on the sale - see the section in this guide on VAT on the sale of a going concern.
VAT Registration After You Take Over a Business
If you're not registered for VAT when you take over a business, you might still have to register at some point in the future. You will have to add your turnover (if any) for the previous 12 months to that of the VAT-registered business you bought and check this against the current registration threshold, on a rolling monthly basis.
Visits by VAT Officers
VAT officers are responsible for the collection of VAT for the government. They check businesses to make sure that their VAT records are up to date. They also check that amounts claimed from or paid to the government are correct. They examine VAT records, question the business owner or the person responsible for the VAT records and watch business activity.
Each visit will take from a couple of hours to several days, depending on the complexity of the business. This guide explains why VAT visits are necessary, how they are arranged and what happens during a visit. It also explains what you need to do to prepare for a visit and what happens afterwards.
Your Responsibilities During the Visits by VAT Officers
If your business is VAT-registered, you are responsible for accounting for VAT correctly. You are also responsible for making any VAT payments due on time.
To keep proper VAT accounts, you need to keep various documents you have issued or received - including receipts and suppliers' invoices. You do not have to keep records in any set way, but they must be complete and up to date. They must also be easy for VAT officers to check, and the figures that you have used to fill in your VAT Return must be easy to reconcile. Usually, you can adapt your normal business records quite easily to provide this information.
Why HMRC Makes VAT Visits
HM Revenue & Customs (HMRC) makes VAT visits as part of their checks to make sure that you are paying the correct amount of VAT. VAT officers also use their visits to make sure that your accounting and record keeping is accurate and up to date.VAT officers can give you help and guidance during their visit. You shouldn't hesitate to ask them questions on anything you're unsure about. There is no need to wait for a visit to do this - you can contact HMRC at any time.
Practical Aspects of VAT Visits
How often VAT officers visit depends on the size and complexity of your business and your past record of meeting VAT requirements. If you have previously submitted late or incorrect VAT payments or declarations, then VAT officers may visit you more often.
Visits vary in length. If you have a small business, your visit might only last a few hours. If you have a large or complex business, it might take two or more days. The majority will be completed within one day. Providing the relevant records and assisting VAT officers to understand them will help to speed things up, particularly if there is anything special or unusual about your business.
Generally one officer will visit, but may be accompanied by a colleague to speed the visit up, or to cover a different area of VAT. Occasionally the officer may be accompanied by a colleague who is undergoing training.You may also be visited at a later date by a more senior officer who will check that the first officer carried out their duties correctly.
Who the VAT Officer Will Want to Meet
When a VAT officer visits, they will want to talk either to you or to the person responsible for your VAT. If there is another responsible person who can answer any questions and provide further information about VAT, then you will not need to be present throughout the visit. However, at the end of the visit, the VAT officer will discuss their findings with you - see the section in this guide on what happens after a visit.
If you have a professional adviser who helps with your business, then you need to decide whether they should be present during a visit. If they are the best person to explain your business accounts, or deal with a difficult problem, then it would be helpful if they could be present. They may charge you for attending.
Where the VAT Officer Will Want to Visit
VAT officers normally visit you at your main place of business. This allows them to: -
Get a better understanding of your business;
Answer any queries you have;
Check your records with as little disruption as possible.
If you do not keep your VAT records at your main place of business, you should tell HMRC when they make the appointment for the visit. The VAT officer can then tell you which records they need to see, or agree to examine them somewhere else. Even if the VAT officer examines your records in a different place, they may still want to visit you at your main place of business to discuss your business and see your premises.
This won't always be necessary - if, for example, your principal place of business is your home, and your work is that of a computer consultant or similar, the VAT officer may agree to meet you at your accountant's premises instead.
What Happens During a Visit
When a VAT officer arrives, they will identify themselves by name, produce their ID card and explain why they're there. They'll be quick and efficient to keep the disruption to your business to a minimum. First, they'll discuss the various aspects of your business with you. Then they'll examine your business records and, where appropriate, inspect the premises and any goods on the premises.
They will also take some details of supplies made to, or by, you. This is so that they can cross-check the correct tax treatment in your suppliers' or customers' records. On some occasions, this will be the main purpose of the visit. If this is the case, the VAT officer will tell you when making the appointment.
At the end of the visit, the VAT officer will: -
Review with you the work carried out during the visit;
Explain any areas of concern they have identified, discuss them with you and agree any future action needed;
Explain any adjustment they need to make to the VAT payable, agree it with you as far as possible and explain how it will be made;
Tell you if you have overpaid or underpaid.
Where there is anything you need to pay, or any payment due to you, HMRC will confirm this with you in writing - generally a few days later. If you disagree with a decision, first discuss it with the visiting officer. In any case, they'll tell you how to get a review of the decision or how you can appeal if you disagree with it.
Remember that even if a VAT officer does not find any mistakes in your records during a visit, you must not assume that this means you are accounting for VAT completely correctly. The officer will not normally have time to examine all of your records, so it will still be your responsibility to ensure that correct accounts are kept and that the correct payments are made.
What Happens After a VAT Visit
Afterwards, if you or HMRC think it's necessary, HMRC will write to you with a summary of the visit, along with any rulings, agreements or recommendations. If there are any unresolved matters HMRC will give you a reasonable amount of time to provide further information. If you disagree with any decisions, or wish to appeal on other grounds, you may appeal to an independent tribunal.
If you think that an officer has exceeded his or her authority or acted improperly, you can ask for an explanation. If you're not satisfied you may wish to make a formal complaint.
How You Can Help During the VAT Visit
During the visit, please help the VAT officer understand your business and records and co-operate fully with them. If you refuse to show the VAT officer the records they want to see they can use legal powers to obtain relevant records. If you want further explanation, you should contact the officer's manager. The officer will provide their manager's contact details if you ask for them. Apart from that, the best way of helping is: -
Keep your records, accounts and payments up to date;
Provide HMRC with the information they request within the specified time.
What is an NETP?
An NETP is any person who is not normally resident in the UK, does not have a UK establishment. A non-established taxable person who is: -
Not normally resident in the UK;
Does not have a place of business in the UK;
Is not incorporated under UK law but, makes taxable supplies in the UK.
A UK establishment exists if: -
The place where essential management decisions are made and the business’s central administration is carried out is in the UK;
The business has a permanent physical presence with the human and technical resources to make or receive taxable supplies in the UK.
HMRC would normally consider a company which is incorporated in the UK to have an establishment here as long as it is able to receive business supplies at its registered office. If your company has being registered as an NETP organisation, you are not in title to use a UK registered company as the UK resident business entity in accordance with the terms of Double Tax Treaties. Such kind of the NETP registered company is not a UK resident entity, and needs to be regulated by local authorities from where the effective corporate management has being arranged.
In the case if you would like to learn more about the NETP registration and how it may affect your international business affairs, please do not hesitate to contact us via an e-mail, or by phone.
When Must an NETP Register for VAT in the UK?
From 1st December 2012, if you make any taxable supplies in the UK, you must register for VAT here, and account for any UK VAT to HMRC.
Appointing Someone to Deal With Your VAT Affairs
An accountant or agent (such Coddan CPM) can act on your behalf to submit your VAT Returns and deal with HM Revenue & Customs (HMRC) on other VAT matters.
If you authorise an accountant to act on your behalf to deal with VAT, you must inform HMRC. However, you do not need to inform HMRC if your accountant is submitting your VAT registration application on your behalf.
If you sell to UK customers but are not based in the UK - what HMRC calls a non-established taxable person - you might want to appoint a tax representative, accountant or an agent to deal with HMRC on your behalf about your VAT affairs.
Authorising an Accountant and Notifying HMRC
If you want an accountant to act on your behalf to deal with VAT you must inform HMRC. If you already use an accountant or tax adviser to deal with HMRC on other matters such as PAYE or Corporation Tax, you can use the same accountant to deal with your VAT affairs - but you still must notify HMRC. However, you do not need to inform HMRC if your accountant is submitting your VAT registration application on your behalf.
Foreign Businesses Registered for UK VAT Selling to UK Customers
If you sell to UK customers but are not resident in the UK, do not have a UK office or your company is not incorporated in the UK, you are what HMRC calls a 'non-established taxable person' (NETP). You may choose to appoint an accountant, tax representative or an agent to deal with HMRC on your behalf about your VAT affairs.
Appointing an Accountant for the VAT Purpose
If you choose to authorise an accountant to act on your behalf and you want them to submit your VAT Returns online, your accountant must use the VAT for Agents online service to set up an authorisation for VAT. Otherwise you can complete a paper authorisation form 64-8, and send it to HMRC. This gives HMRC your permission to deal directly with your agent about your VAT affairs. Remember, if you use an accountant you are still legally responsible for registering for VAT, submitting accurate VAT Returns and paying VAT on time.
Appointing a VAT Tax Representative
A tax representative is jointly and severally liable for any VAT debts incurred by the business. They must keep VAT records and account for UK VAT on behalf of the business they represent. If you register for VAT online then you will be provided with the opportunity to appoint a tax representative as part of that process.
Appointing a VAT Agent
Your agent is responsible for maintaining your VAT records and accounting for UK VAT on your behalf but they are not jointly and severally liable for any VAT debts incurred by the business.Instead, if you register for VAT online then you will be provided with the opportunity to appoint an agent as part of that process.
What if I Don't Want to Appoint a Tax Representative or an Agent?
If you don't want to appoint a tax representative or agent, you must still meet all your obligations under UK VAT law. This includes: -
Registering for VAT at the correct time;
Keeping a record of everything you buy and sell in relation to your business in the UK;
Keeping the records needed to complete your VAT return;
Producing records and accounts to HMRC for the further inspections;
Keeping a note of all the VAT you have paid and charged for each period covered by your VAT return, and;
Paying the right amount of tax on time.
In the case if you can not afford the requirements above, you must appoint your tax representative or an agent, there are no further choices.
What is EORI Number?
An EORI number is a number, unique throughout the European Community, assigned by a customs authority in a Member State to economic operators (businesses) or persons. By registering for customs purposes in one Member State, an Economic Operator (EO) is able to obtain an EORI number which is valid throughout the Community. The EO will then use this number in all communications with any EC customs authorities where a customs identifier is required for example customs declarations.
What are the Reasons for Introducing EORI Registration?
The implementation of EORI will ensure that the measures to enhance security introduced by the Security Amendment (Council Regulation 648/2005) and its Implementing Provisions will be more effective if EOs could be identified by reference to a common number unique to each EO within the EU.
When is the EORI Number Used?
This unique number will be used by EOs, for example, on the provision to the customs authorities of pre-arrival and pre-departure information on all goods entering and leaving the customs territory of the Community. The EORI number is also included on the customs declaration when you import your goods from or export goods to countries outside the EU. This includes if you occasionally buy items for your business from outside the EU for example machinery/equipment, goods for exhibition, samples, office supplies etc even though your business is not usually involved in importing or exporting.
In addition it will be used for the exchange of information between the customs authorities as well as between customs authorities and other authorities for example other government departments but only in respect of the movement of goods involving a customs procedure.
Am I Eligible for an EORI Registered Number?
The legislation restricts the issue of an EORI number to a legal entity - sole proprietor, partnership, company or individual. It therefore cannot be allocated to individual branches or divisions within a legal entity. Only one number can be issued per legal entity.
How Are the EORI Nmbers Structured?
All UK EORI numbers start with the letters GB. Most are followed by a twelve digit number based on the EO’s nine digit VAT number with a three digit suffix number at the end, for example GB123456789000.
This meant that over 98 per cent of existing TURN holders including Pseudo TURNs were given an EORI number which was exactly the same as their previous TURN.
Most UK EORI numbers end 000. However some numbers relating to VAT Group Registrations, where each EO is a separate legal entity, will end in a three digit suffix other than 000.
The structure of the UK EORI number is the same for UK EOs who are not registered for VAT or EOs who are not established in the customs territory of the community.
When Can I Apply for an EORI Number?
If you are a UK VAT-registered EO you may apply as soon as you become aware you will be involved in customs activities in the near future.
UK EOs who are not registered for VAT or EOs who are not established in the customs territory of the community may apply as soon as you become aware you will be involved in customs activities. However this should not be before all details required on your application, are available.
How Do I Get My VAT Numbers Recognised When I Quote my EORI Number on Customs Declarations?
An EO: -
With a single legal entity;
Operating in more than one Member State.
May be given a separate VAT number in each Member State but only allocated a single EORI number by the Member State where the EO is established. In some cases there have been problems for EOs with their customs declarations in having their EORI number linked to all their associated VAT numbers. To help resolve this situation, from 1 July 2010 you may request the customs administration which allocated your EORI number to also include all directly associated VAT numbers, issued by other Member States, against your EORI number.
The VAT numbers notified to customs must relate to the same legal entity.
Provision of the additional VAT numbers to customs is optional. You should be aware that HMRC will add this information to the EU database which can be accessed by all EU customs administrations and the Commission. You must notify HMRC as soon as possible should any of the notified VAT numbers cease to exist or no longer apply to your EORI number.
Register for VAT: The Top VAT Tips
Be clear about the impact of VAT on growing your business turnover. Make sure your business plan looks at how you will deal with the impact of registering for VAT. For example, if you provide services to members of the public, registering for VAT may have major implications for your pricing structure. If you do register for VAT, Customs wants to work with you to help make the process as simple as possible.
Monitor your turnover so that you know when you are approaching the VAT registration threshold. Apply to register in plenty of time so that you have your VAT number when you need it.
There are a number of schemes to make dealing with VAT easier. For example, the "cash accounting" scheme means that you only pay the VAT to Customs after your customer has paid you. The "Flat Rate Scheme" can help reduce the time spent on VAT bookkeeping. When you register always ask what schemes are available to make paying your VAT easier.
Always keep your books up-to-date and check accounting documents. Good book keeping is a vital part of good overall business management. It's always better to spend those few extra minutes each day writing things up and filing then properly, rather than sorting out piles of documents at once. Always check documents you receive, for example, you must have a "VAT invoice" to claim back VAT - a "statement" is not a proper invoice. Always enter cash receipts in your books before using the cash to make purchases.
Don't worry if Customs make contact with you. Following these top ten tips you will help you get things right, meaning you need not worry about your VAT affairs. Consequently you should not worry if Customs make contact with you. Customs do contact businesses from time to time and they may want to visit your business. Don't be concerned if Customs visit you, they will tell you why they want to visit and what information they will want to see.
It is also charged on goods, and some services, imported from places outside the European Union and on goods and some services coming into the UK from the other EU countries. All goods and services that are VAT rated are called 'taxable supplies'. You must charge VAT on your taxable supplies from the date you first need to be registered. The value of these supplies is called your 'taxable turnover'.
Some examples of taxable supplies: -
Selling new and used goods, including hire purchase;
Renting and hiring out goods;
Using business stock for private purposes;
Providing a service, for example hairdressing or decorating; and
Charging admission to enter into buildings.
If you are VAT registered, you will charge VAT on many goods and services you supply to customers in the UK and Isle of Man. VAT does not apply to certain services because the law says these are 'exempt' from VAT. These include loans of money, some property transactions, insurance and certain types of education and training. Supplies that are exempt from VAT do not form part of your taxable turnover.
When will I Get My VAT Registration Number?
HM Revenue and Customs will tell you your VAT registration number once they have checked the details of your application. You will receive a certificate of registration showing your full registration details. You should receive our reply within 3 weeks of sending in your form. If they have not replied in this time, contact the National Registration Service to make sure they received your application.
When Must I Start Keeping Records and Charging VAT?
You must start keeping records and charging VAT to your customers from the date you know you have to be registered.
You can charge VAT before you are registered but until you have a registration number you must not show VAT as a separate item on any invoice you issue. You can change your prices to include VAT and explain to any of your customers who are also registered that you will be sending them VAT invoices later. Once you have your registration number you should send the necessary invoices showing VAT within 30 days.
If you have asked for voluntary registration you should start keeping records and charging VAT from the date you are registered. This will normally be the registration date you asked for on your application form.
Please note that, once you are registered, you must account for and charge VAT on all your taxable supplies, distance sales, acquisitions and relevant supplies in the UK, regardless of whether those values are above the threshold, for example if you are registered because your distance sales are above the relevant registration threshold, once registered, you must account for VAT on all your taxable income.
VAT Paid Before the Registration
Subject to certain conditions you can reclaim any VAT you are charged on goods or services that you use to set up your business. Normally, this will include: -
VAT on goods you bought for your business within the last 3 years and which you have not yet sold; together with
VAT on services, which you received not more than 6 months before your date of registration.
You should include this VAT on your first VAT return.
What Records Must I Keep?
You must keep records of all your business supplies and purchases. You should also keep a note of all the VAT you have charged and paid for each period covered by your VAT returns - this is called a VAT account. If you are already in business you will probably find you can use your normal business records to give this information.
What is a VAT Return?
The VAT return is the form you use to notify HM Revenue and Customs of the amount of VAT due on sales, distance sales, etc and the amount of VAT due to you from purchases etc. You will normally receive this every three months. The period covered by this return is called your tax period.
You will need to show the value of the goods you have bought and sold during the period which the return covers, pay any tax due, or claim a repayment if tax is owed to you.
How do I Decide if I am Making a Supply of Goods in the UK?
You may be making a supply of goods in the UK if the goods in question have at some stage been physically located here. You may also be making supplies even if you have no place of business here. Examples of supplies of goods in the UK include the sale of goods: -
Located in the UK and which remain here;
Located in the UK for export to a place outside the EC;
Located in the UK for removal to another EC Member State;
You import into the UK from outside the EC (but if your customer imports the goods, your supply is outside the scope of UK VAT);
In the UK which you have acquired from another EC Member State; or
You install or assemble here.
There are a number of rules for deciding where different types of services are treated as supplied. If the place of supply of your services is the UK, you must normally charge any UK VAT due and pay it to HM Revenue and Customs, even if you do not have a place of business here.
You do not need to register in the UK if you only make supplies of services on which your customer is liable to account for any VAT due under the reverse charge procedure. Where services are transferred between branches of the same company, you may generally disregard the supply for the purposes of UK VAT.
Exemption from the VAT Registration
If all or most of your taxable supplies, or acquisitions are zero-rated, you may not need to be registered for VAT. This is called exemption from registration. However, you do still need to complete the relevant form if you wish to apply for exemption from registration. If VAT is due on some of your supplies, you must be able to show HM Revenue and Customs that, if you were registered, your input tax would normally be more than your output tax for your application for exemption to be allowed.
Input tax is the VAT you pay on the goods and services you purchase for use in the course of your business. Output tax is the VAT you charge on your taxable supplies. If you are allowed exemption from registration, you will not be able to reclaim the input tax you pay when you buy goods or services for your business.
If you make relevant supplies that are zero-rated, you can apply for exemption from registration, by completing the relevant form. You should also enclose a letter confirming your request and explaining why your supplies are zero-rated.
If you are granted exemption from registration you must tell HM Revenue and Customs at any time if your circumstances change, including the nature of the supplies you make, as you may not be entitled to exemption any longer.
What if I Notify HM Revenue and Customs Late?
You may also incur a late registration penalty if you fail to notify HM Revenue and Customs of your liability to be registered by the proper time. The penalty amount will depend on the amount of VAT due and length of time you have taken to notify HM Revenue and Customs.
What if I Deliberately Avoid Registering for VAT?
If you deliberately avoid registering for VAT, you may be liable to a penalty equal to the amount of VAT you should have paid HM Revenue and Customs. For serious offences the matter will be investigated and HM Revenue and Customs may bring criminal proceedings.
When will HM Revenue and Customs visit me? This will depend on the size and complexity of your business and your past compliance with legislation. Businesses which send in late or incorrect declarations and payments are visited more often. It is therefore in your interest to ensure that your declarations are correct from the outset.
Tax Avoidance
Tax avoidance is not illegal. However, it can give a business an unfair tax advantage over others, and puts at risk tax simplification measures. We have to take action to counter this and will continue to do so. That action includes the use of litigation, or the introduction of new legislation.
The VAT Law & VAT Regulation
VAT law in the European Community is governed by various Directives, notably the Sixth VAT Directive (1977).
The Directives are given effect in the UK mainly by the Value Added Tax Act 1994 as amended by subsequent Finance Acts. But there are many detailed rules in Statutory Instruments. These are either orders made by the Treasury or regulations made by Customs and Excise. Copies of the Act and of Statutory Instruments are available from Stationery Office bookshops.
Generally speaking, this notice and the other VAT notices explain how Customs and Excise interpret the VAT law. However, sometimes the law says that the detailed rules on a particular matter will be set out in a notice or leaflet published by Customs and Excise rather than in a Statutory Instrument. When this is done, that part of the notice or leaflet has legal force, and that fact will be clearly shown at the relevant point in the publication.
VAT Misunderstanding
In certain circumstances, HM Revenue and Customs may exceptionally take no further action about VAT undercharged by a taxable person as a result of a genuine misunderstanding which does not concern anything clearly covered in HM Revenue and Customs published guidance, or in specific instructions given to that taxable person.
VAT Misdirection
If a Customs and Excise officer, with the full facts before him or her, has given a clear and unequivocal ruling on VAT in writing or, knowing the full facts, has misled a taxable person to that person's detriment, any assessment of VAT due will be based on the correct ruling from the date the error was brought to the taxable person's attention.
Both these concessions can only be applied with HM Revenue and Customs prior agreement. If you think that either of them applies to you, you should contact your local VAT Business Centre.
Complaints
Although HM Revenue and Customs aim is always to provide a high standard of service, sometimes things may go wrong. If they do, HM Revenue and Customs have internal procedures for handling complaints fairly and speedily. Whenever possible, you should try to resolve your complaint on the spot with HM Revenue and Customs officer, but if you are unable to do so you should contact one of HM Revenue and Customs Regional Complaints Units.
If you are not satisfied with the decision, you can ask the Adjudicator to look into your case. The Adjudicator's service is free.
How Does the VAT Work?
If you make standard-rated supplies, you have to account to Customs and Excise for the VAT due. This is HM Revenue and Customs output tax.
You will normally charge the VAT to your customers. If your customers are registered for VAT and the supplies are for use in their business, the VAT is their input tax. In the same way, VAT charged to you on your business purchases is your input tax.
As a registered person, you can reclaim from Customs and Excise as much of the VAT on your purchases, and imports, as relates to the standard-rated, reduced-rated and zero-rated supplies you make. In principle, you cannot reclaim VAT which relates to any non-business activity or to any exempt supplies you make.
Can I Claim VAT Relief if My Customer Has Not Paid Me?
If you make taxable supplies of goods or services to a customer for which you are not paid, you may be able to reclaim relief from VAT on the bad debts.
Imported Goods
When goods are imported into the UK from outside the EC, VAT is normally due at the same rate as on a supply of those goods in the UK. VAT must be paid when you import the goods or, if you or your agent is approved for duty deferment, you can defer payment with any duty.
Exported Goods
If you export goods to a customer outside the EC, your supply is normally zero-rated provided that you meet the appropriate conditions. There are a number of notices which deal with exports. You will find out more about these, and the conditions which you must meet to zero-rate your supplies. Some supplies of services to overseas customers are zero-rated, but many are standard-rated.
Intra-EC Supplies of Goods
If you supply goods to a VAT-registered customer in another EC Member State and the goods are removed from the UK to another EC country, your supply may be zero-rated provided you meet the appropriate conditions.
Services from Abroad
If you receive services from abroad, you must take their value into account when working out whether you must be registered. You may still have to be registered, even though you make no other types of taxable supplies or the value of your other types of taxable supplies are below the registration limits.
Goods Supplied on Sale or Return, Approval or Similar Terms
When you supply goods on sale or return etc, they have not been sold and you still own them until such time as they are adopted by your customer. Adoption means that the customer indicates a wish to keep them. Until your customer does so, your customer has an unqualified right to return them at any time, unless you have agreed a time limit.
You may have fixed a time limit of adoption of less than 12 months from the date when the goods were sent. If a time limit has been fixed for a period of 12 months or less, then the basic tax point is the date when that time limit expires. If a time limit has not been fixed or fixed for a period of more than 12 months, 12 months from the date when the goods were sent. In either case if your customer adopts the goods before the time limit expires the date of adoption becomes the basic tax point.
If you receive a payment which is not returnable, this will normally indicate that the goods have been adopted. The payment of a deposit required as a condition of delivery - which is repayable if the goods are returned - does not constitute adoption.
It is your responsibility to make sure that your customers notify you promptly when they have adopted goods. For VAT purposes, place of supply is the place where a supply is treated as being supplied, or made. This is the place where it is liable to any VAT. There are a number of place of supply rules for determining where services of different kinds are made. Where the place of supply of services is in a member State of the European Community (EC), that supply is liable to VAT (if any) in that member State and in no other country.
If the member State is not the UK, such supplies are said to be "outside the scope" of UK VAT.
Where the place of supply of services is outside the EC, that supply is made outside the EC and is therefore not liable to VAT in any member State (although local taxes may apply). Such supplies are said to be "outside the scope" of both UK and EC VAT.
What Does "Place of Supply" Mean for UK Suppliers?
If the place of supply of your services is the UK, you must charge any UK VAT due and account for it to Customs and Excise regardless of where your customer belongs. If the place of supply of your services is another member State, you or your customer will be liable to account for any VAT due to the tax authorities of that country.
Where the place of supply of your services is outside the UK, you should ensure that your records demonstrate that your supplies are eligible for such treatment.
What About the VAT Liability?
This notice does not cover VAT liability. There is no general relief for the export of services as there is for goods. Services supplied in the UK may be exempt, zero-rated, standard-rated or liable for VAT at a reduced rate.
What Does Business Establishment Mean?
The business establishment is the principal place of business and is usually the head office, headquarters or "seat" from which the business is run. There can be only one such place which may be an office, showroom or factory.
Examples of Business Establishment
A business has its headquarters in the UK and branches in France, Italy and Germany. Its business establishment is in the UK. A company is incorporated in the UK but trades entirely from its head office in Bermuda. Its business establishment is in Bermuda.
What is a Fixed Establishment?
A fixed establishment is an establishment other than the business establishment, which has both the technical and human resources necessary for providing or receiving services permanently present. A business may have several fixed establishments, including a branch of a business or an agency.
An agency is a separate business which behaves in a similar way to a branch. It acts on the instructions of its principal, often in the principal's name, in the conduct of the principal's business. It includes any business which does not, in function and substance, operate independently of its principal. A business may be the agency of a principal, irrespective of whether it has any authority or capacity to create a legal relationship between that principal and a third party.
However, you are not carrying on a business through an agency if it: acts merely as an intermediary in bringing together customer and provider, but is not directly involved in the supply chain; or supplies only incidental elements such as clerical or typing services.
If you carry on business through a branch or agency, you have a fixed establishment where the branch or agency is located.
Examples of Fixed Establishment
An overseas business sets up a branch comprising staff and offices in the UK to provide services. The UK branch is a fixed establishment. An overseas television company sends staff and equipment to the UK to film for a week. The temporary presence of human and technical resources does not create a fixed establishment in the UK.
A company with a business establishment overseas owns a property in the UK which it leases to tenants. The property does not in itself create a fixed establishment. However, if the company has UK offices and staff or appoints a UK agency to carry on its business by managing the property, this creates a fixed establishment in the UK.
An overseas business contracts with UK customers to provide services. It has no human or technical resources in the UK and therefore sets up a UK subsidiary to act in its name to provide those services. The overseas business has a fixed establishment in the UK created by the agency of the subsidiary.
A company is incorporated in the UK but trades entirely overseas from its head office in the USA, which is its business establishment. The UK registered office is a fixed establishment. A UK company acts as the Operating Member of a consortium for offshore exploitation of oil or gas using a fixed production platform. The rig is a fixed establishment of the Operating Member.
What is Usual Place of Residence?
If you have no business or other fixed establishment in any country and your business is a limited company or other corporate body, it belongs where it is legally constituted.
Individuals receiving supplies in a non-business capacity are treated as belonging in the country where they have their usual place of residence. An individual has only one usual place of residence at any point in time. Individuals are normally resident in the country where they have set up home with their family and are in full time employment. They are not resident in a country they are only visiting as a tourist.
Examples of Usual Place of Residence
A company incorporated in Bermuda has no business or fixed establishment anywhere in the world but its board of directors meet from time to time in different countries, including the UK.
The company belongs in Bermuda where it is incorporated.
A person lives in the UK, but commutes to France daily for work. He belongs in the UK. Overseas forces personnel on a tour of duty in the UK live in rented accommodation with their families.
They have homes overseas to which they periodically return on leave. They belong in the UK throughout their tour of duty.
Why is it Important to Identify the Exact Nature of My Services?
It is essential to identify the real nature of a supply of services where general or generic descriptions are used, because it may affect which place of supply rule applies. Sometimes the same term may be used to describe a variety of activities. For example, the term "management services" does not indicate the nature of the services supplied, some of which may fall under the basic rules whereas others may not.
Although reference to your own costs may suggest the nature of your services, you should ask yourself "what am I supplying?". Your invoices should explain the type of services you are actually providing.
When am I an Intermediary?
You are an intermediary for the purpose of this section if you act as a third party in arranging, or even simply facilitating, the making of supplies. An intermediary arranges supplies between two other parties; a supplier and that supplier's customer. Intermediaries may be referred to as brokers, buying or selling agents, go-betweens, commissionaires or agents acting in their own name (undisclosed agents). Payments for their services are often described as commission.
In this section, your customer is the person to whom you supply your intermediary services. This can be either the supplier or the recipient of the arranged supply (and in some cases may even be both).
What are Intermediary Services?
Intermediaries can be known by a variety of titles, for example they may be described as agents or brokers. Intermediary services involve the making of arrangements for the supply of certain goods or services between two principals: the supplier and the customer. Intermediary services can be supplied either to the supplier (in finding a customer) or to the customer (in finding a supplier), or sometimes to both supplier and customer.
What is the VAT Treatment of Intermediary Services?
If you supply intermediary services you need first to establish the place of supply of your services. There are different place of supply rules for intermediary services which depend on the nature of the service which you are arranging.
What if the Place of Supply of My Services is the UK?
If you make taxable supplies in the UK above the registration threshold, you are liable to register for VAT. However, if all of your supplies are zero-rated you may apply for exemption from registration. If the value of your supplies is below the threshold you may also register on a voluntary basis.
Tax Point for Certain On-Going Supplies. Who is Likely to be Affected?
Connected businesses which delay charging VAT on certain on-going supplies made between them.
General Description of the Measure
The measure concerns certain on-going supplies, sometimes described as continuous supplies, examples of which are electricity, piped gas and water, leasing of property and equipment, management services and telephone services.
The time at which a supplier must charge VAT is known as the tax point.
Current tax point rules for these supplies mean that VAT becomes due only when a VAT invoice is issued or a payment is received, whichever is earlier. Some businesses have exploited these rules for the benefit of connected businesses that cannot recover all of their input tax by delaying (sometimes indefinitely) both payment and invoicing.
Where these supplies are made between connected businesses, tax points will be created periodically, in most cases based on 12 month periods, to ensure that accounting for VAT cannot be indefinitely or excessively delayed.
Goods Taken for Personal or Other Non-Business Use
If you take goods out of your business permanently, for non-business use, then the tax point is the time when the goods are taken or set aside for this purpose.
If you take goods out of your business temporarily for non-business use, but they are still part of your stock or business assets, then there is a tax point each time they are used or - if the non-business use continues over a period of time - on the last day of each tax period that the goods are used or made available for that purpose.
What if I Have Separated My Business into Smaller Parts?
Where a business has been artificially separated into smaller parts and this results in the avoidance of VAT, HM Revenue and Customs have power to direct that the persons running these activities be treated as a single taxable person and registered.
What is a VAT Invoice and When Should I Issue One?
Whenever you supply standard-rated or reduced-rated goods or services to another registered person, you must give that person a VAT invoice.
A VAT invoice is a document containing certain information about what you are supplying. Your customers need VAT invoices to reclaim, as input tax, the VAT you have charged them.
You need not issue VAT invoices for supplies to customers who are not VAT registered. In practice, this will probably mean issuing a VAT invoice to any customers who ask for one, as you will usually have no way of telling whether they are VAT registered or not. You do not have to check that a customer is VAT registered before issuing a VAT invoice.
If your customer pays in cash - not by cheque - you must, if asked, clearly show on the VAT invoice that payment has been received, and the date of receipt.
What Information is Required on a VAT Invoice?
VAT invoices must show: -
An identifying number;
Your name, address and VAT registration number;
The time of supply (tax point);
Date of issue (if different to the time of supply);
Your customer's name (or trading name) and address;
The type of supply; and
A description which identifies the goods or services supplied.
For each description, you must show: -
The quantity of goods or extent of the services;
The charge made, excluding VAT;
The rate of VAT;
The total charge made, excluding VAT;
The rate of any cash discount offered;
Each rate of VAT charged and the amount of VAT charged at each rate and shown in sterling; and
The total amount of VAT charged, shown in sterling.
Type of supply. You must identify the following types of supply separately: -
Sale;
Hire-purchase, conditional sale, credit sale or similar transactions;
Loan;
Exchange;
Hire, lease or rental;
Process (making goods from someone else's materials);
Sale on commission (for example, by an auctioneer); and
Sale or return or similar terms.
Pro-Forma Invoices
Pro-forma invoices are often used to offer goods or services to potential customers. Such an offer may or may not be taken up, and the goods or services will not be supplied unless payment is received.
If you use pro-forma invoices in this way, they cannot be used as evidence to reclaim input tax, even if they show all the details required for a VAT invoice. You should ensure that they are clearly marked "THIS IS NOT A VAT INVOICE".
Self-Billing
Under a self-billing arrangement, the customer makes out VAT invoices for a VAT-registered supplier and sends a copy to the supplier with the payment.
If you want to use a self-billing system for supplies made to you, you must write to the VAT Business Centre for your area, giving details of the proposed system, and explaining why you need to use such a system in your business. For a self-billing arrangement to be approved, you must satisfy certain conditions, including the need to make sure that your suppliers: -
Agree to self-billing; and
Will not issue VAT invoices for the relevant transactions.
Authenticated Receipts
You should not confuse the use of authenticated receipts with self-billing.
Authenticated receipts are used in the construction industry in place of VAT invoices for supplies of services or of goods and services made under contracts which provide for periodic payments to be made. The receipts are only valid for VAT purposes if: -
They are authenticated - that is, signed by the supplier; and
No normal VAT invoice or self-billed document is issued for the supplies.
Transmission by Fax
This form of transmission relies on both the supplier and the customer having fax machines.
There is a risk with this form of transmission - that the invoice may not be permanent if your customers have thermal-paper fax machines. More modern fax machines copy onto plain paper and these copies are as permanent as normal paper invoices.
However, thermal paper copies deteriorate over time, and, as a result, your customers may be unable to fulfil their obligation to preserve their invoices for 6 years.
HM Revenue and Customs therefore advise you to warn customers that the invoices may not be permanent if they have a thermal-paper fax machine. Preferably, this should be by a note on the VAT invoice, but it can be in any form practicable to you.
Transmission by E-mail
You may use this form of transmission without the requirements normally applied to businesses who transmit their invoices electronically (EDI).
However, you should notify the VAT Business Centre if you wish to use e-mail to transmit invoices under a self-billing arrangement. This is because there is a danger that the e-mail message can be corrupted during transmission, causing it to be incomplete or indecipherable. The supplier may then receive a document notifying an output tax liability which they cannot read.
Because of this risk of corruption if you use e-mail, please advise customers to contact you if any invoice they receive from you is not satisfactory. Again, this would preferably be by a note on the VAT invoice but it can be in any form practicable to you.
What are the Exceptions?
No VAT is charged on taxable supplies made by a business which is not, and is not required to be, registered for VAT. These are known as 'outside the scope' supplies.
VAT does not apply to certain services because the law says these are 'exempt' from VAT. These include loans of money, insurance, certain types of education and training and some property transactions (selling, leasing and letting land and buildings, but not garages, parking spaces, hotel or holiday accommodation). Supplies that are exempt from VAT do not form part of your taxable turnover.
If the only services you supply are exempt supplies, you can't normally be registered for VAT. If you are registered for VAT and have some exempt supplies you may not be able to get all your input tax back.
How Long do I Need to Keep Records?
You must keep all your business records for at least 6 years. If the 6-year rule causes you serious storage problems or undue expense HM Revenue and Customs may allow you to keep some of your records for a shorter period.
Special Arrangements for Small Businesses
If you are a small business, special arrangements are in place to help you when you first have difficulties sending your VAT return or paying on time. You will be sent a letter offering help and support rather than a Surcharge Liability Notice the first time you default. This arrangement is intended to give you extra time to sort out any short-term difficulties before formally entering the default surcharge system. If you default again within twelve months you will receive a Surcharge Liability Notice.
How is the Surcharge Calculated?
The surcharge is calculated as a percentage of the VAT that is unpaid at the due date. If you don't send in your return the amount of VAT you owe will be assessed and the surcharge will be calculated as a percentage of that amount.
For the first late payment during a surcharge period the surcharge will be 2% of the tax outstanding at the due date. The rate of surcharge will then increase progressively to 5%, 10% and 15% for further payment defaults in a surcharge period.
VAT & EU
The Value Added Tax, or VAT, in the European Union is a general, broadly based consumption tax assessed on the value added to goods and services. It applies more or less to all goods and services that are bought and sold for use or consumption in the Community. Thus, goods which are sold for export or services which are sold to customers abroad are normally not subject to VAT. Conversely imports are taxed to keep the system fair for EU producers so that they can compete on equal terms on the European market with suppliers situated outside the Union.
The Value Added Tax is: -
A general tax that applies, in principle, to all commercial activities involving the production and distribution of goods and the provision of services.
A consumption tax because it is borne ultimately by the final consumer. It is not a charge on businesses.
Charged as a percentage of price, which means that the actual tax burden is visible at each stage in the production and distribution chain.
Collected fractionally, via a system of partial payments whereby taxable persons (i.e., VAT-registered businesses) deduct from the VAT they have collected the amount of tax they have paid to other taxable persons on purchases for their business activities. This mechanism ensures that the tax is neutral regardless of how many transactions are involved.
Paid to the revenue authorities by the seller of the goods, who is the "taxable person", but it is actually paid by the buyer to the seller as part of the price. It is thus an indirect tax.
What is a taxable person? For VAT purposes, a taxable person is any individual, partnership, company or whatever which supplies taxable goods and services in the course of business. However, if the annual turnover of this person is less than a certain limit (the threshold), which differs according to the Member State, the person does not have to charge VAT on their sales.
How is it charged? The VAT due on any sale is a percentage of the sale price but from this the taxable person is entitled to deduct all the tax already paid at the preceding stage. Therefore, double taxation is avoided and tax is paid only on the value added at each stage of production and distribution. In this way, as the final price of the product is equal to the sum of the values added at each preceding stage, the final VAT paid is made up of the sum of the VAT paid at each stage.
Registered VAT traders are given a number and have to show the VAT charged to customers on invoices. In this way, the customer, if he is a registered trader, knows how much he can deduct in turn and the consumer knows how much tax he has paid on the final product. In this way the correct VAT is paid in stages and to a degree the system is self-policing. The system operates as follows:
Example: -
Stage 1. A mine sells iron ore to a smelter. The sale is worth €1000 and, if the VAT rate is 20%, the mine charges its customers €1200. It should pay €200 to the treasury, but as it has bought €240 worth of tools in the same accounting period, including €40 VAT, it is only required to pay €160 (€200 less €40) to the treasury. The treasury also receives the €40 and now gets €160 making €200 - which is the correct amount of VAT due on the sale of the iron ore.
Supply: €1,000
VAT on supply: €200.00
VAT on purchases: €40.00
Net VAT to be paid: €160.00
Stage 2. The smelter has paid €200 VAT to the mine and, say, another €20 VAT on other purchases, such as furniture, stationery, etc. So when the smelter sells €2000 worth of steel it charges €2400 including €400 VAT. The smelter deducts the €220 already paid on his inputs and pays €180 to the treasury. The treasury receives this €180 from the smelter plus €160 from the mine, plus €40 paid by the supplier of tools to the mine, plus €20 paid by the furniture/stationary supplier to the smelter.
Supply: €2,000
VAT on supply: €400.00
VAT on purchases: €220.00
Net VAT to be paid: €180.00
€180.00 (paid by the smelter) + €160.00 (paid by the mine) + €40.00 (paid by the supplier to the mine) + €20.00 (paid by the supplier to the smelter) = €400.00 or the correct amount of VAT on a sale worth €2,000.
VAT Coverage and VAT Rates
Given that EU law only requires that the standard VAT rate must be at least 15% and the reduced rate at least 5% (only for supplies of goods and services referred to in an exhaustive list), actual rates applied vary between Member States and between certain types of products. In addition, certain Member States have retained separate rules in specific areas.
The most reliable source of information on current VAT rates for a specified product in a particular Member State is that country's VAT authority. Nevertheless, it is possible to get an overview of the different rates applied from the VAT rates in the European Union information document.
VAT on Imports and Exports
For the purpose of exports between the Community and non-member countries, no VAT is charged on the transaction and the VAT already paid on the inputs of the good for export is deducted - this is an exemption with the right to deduct the input VAT, sometimes called 'zero-rating'. There is thus no residual VAT contained in the export price.
However, as far as imports are concerned, VAT must be paid at the moment the goods are imported so they are immediately placed on the same footing as equivalent goods produced in the Community. Taxable people registered for VAT will be allowed to deduct this VAT in their next VAT return.
VAT on Goods Moving Between Member States
No frontier controls exist between Member States and therefore VAT on goods traded between EU Member States is not collected at the internal frontier between tax jurisdictions.
Goods supplied between taxable persons (or VAT registered traders) are exempted with a right to deduct the input VAT (zero-rated) on despatch if they are sent to another Member States to a person who can give his VAT number in another Member State. This is known as an "intra-Community supply". The VAT number can be checked using the VAT Information Exchange System (VIES).
The VAT due on the transaction is payable on acquisition of the goods by the taxable customer in the Member State where the goods arrive. This is known as "intra-Community acquisition". The customer accounts for any VAT due in his normal VAT return at the rate in force in the country of destination.
How do the Member States Apply for VAT?
The detailed application of VAT varies according to the administrative customs and practices of each Member State within the framework set out by Community legislation.
Why do All Member States Use the VAT?
At the time when the European Community was created, the original six Member States were using different forms of indirect taxation, most of which were cascade taxes. These were multi-stage taxes which were each levied on the actual value of output at each stage of the productive process, making it impossible to determine the real amount of tax actually included in the final price of a particular product. As a consequence, there was always a risk that Member States would deliberately or accidentally subsidise their exports by overestimating the taxes refundable on exportation.
It was evident that if there was ever going to be an efficient, single market in Europe, a neutral and transparent turnover tax system was required which ensured tax neutrality and allowed the exact amount of tax to be rebated at the point of export. As explained in VAT on imports and exports, VAT allows for the certainty that exports there are completely and transparently tax-free.
The history of VAT in the European Union until 1993. On 11 April 1967 the first two VAT Directives were adopted, establishing a general, multi-stage but non-cumulative turnover tax to replace all other turnover taxes in the Member States. However, the first two VAT Directives laid down only the general structures of the system and left it to the Member States to determine the coverage of VAT and the rate structure.
It was not until 17 May 1977 that the Sixth VAT Directive was adopted which established a uniform VAT coverage. This guarantees that the VAT contributed by each of the Member States to the Community's own resources can be calculated. It still however, allowed Member States many possible exceptions and derogations from the standard VAT coverage. Moreover, it did not set out the rates of VAT to be applied in Member States with the result that these differ widely even today. Currently, there is a standard rate of between 15% and 25% (the maximum is based on a political commitment) and Member States may apply 1 or 2 reduced rates of at least 5%. There are a number of temporary derogations, e.g. zero rates in the United Kingdom and Ireland. The VAT coverage also still differs from one Member State to another.
VAT and the Single Market - 1993 to Now
The realisation of the single market in 1993 resulted in the abolition of controls at fiscal frontiers. To achieve this, the Commission proposed moving from the pre-1993 "destination based" system, where VAT is effectively charged at the rate of VAT applicable where the buyer is established, to an "origin based" system, with VAT being charged at the rate in force where the supplier is established. This would have effectively abolished fiscal frontiers within the EU.
This was, however, not acceptable to Member States as rates of VAT were too different and there was no adequate mechanism to redistribute VAT receipts to mirror actual consumption.
Therefore, until the conditions were right the Community adopted the Transitional VAT System which maintains different fiscal systems but without frontier controls. The intention is still eventually to have a common system of VAT where VAT is charged by the seller of goods - an origin based VAT system. The transitional system is an origin based system for sales to private persons who can go and buy tax paid anywhere they like in the Union and take the goods home without having to pay VAT again. There are some exceptions to this general rule however (e.g. the purchase of new means of transport and distance selling). For transactions between taxable persons it is still a destination based VAT system.
VAT Glossary
These are some plain English definitions of common VAT terms that HMRC uses: -
Acquisitions: goods brought into the UK from other EU countries - (goods brought into the UK from outside of the EU are known as imports);
Corporate body: an incorporated body such as a limited company, limited liability partnership, friendly, industrial or provident society;
Distance sales: where a business in one EU country sells and ships goods directly to consumers in another EU country, eg internet or mail-order sales;
Exports: goods sent to a non-EU country;
Despatches: goods sent to another EU country;
Imports: goods brought into the EU from another country;
Input tax: the VAT you pay on your purchases;
Output tax: the VAT you charge on your sales;
Place of supply: the country in which a supply of goods or services must be accounted for VAT purposes;
Self-billing: your customer issues your VAT invoice and sends a copy to you with their payment;
Supply: selling or otherwise providing goods or services, including barter and some free provision;
Supply of goods: when exclusive ownership of goods passes from one person to another;
Taxable person: any business entity that buys or sells goods or services and is required to be registered for VAT - this includes individuals, partnerships, companies, clubs, associations and charities;
Taxable supplies: all goods and services sold or otherwise supplied by a taxable person which are liable to VAT at the standard, reduced or zero rate;
Taxable turnover: the total value - excluding VAT - of the taxable supplies you make in the UK (excludes capital items like buildings, equipment, vehicles or exempt supplies);
Tax period: the period of time covered by your VAT Return, usually quarterly;
Tax point: the date when VAT has to be accounted for - for goods, this is usually when you send the goods to a customer or when they take them away, for services, this is usually when the service is performed.
VAT Registration: Live Help
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The value added tax (VAT) is the tax charged on most business transactions made in the United Kingdom or in the Isle of Man. The value added tax (VAT) is a general consumption tax assessed on the value added to goods and services. It is a general tax that applies, in principle, to all commercial activities involving the production and distribution of goods and the provision of services. 
You may need to register for VAT, or you may be able to choose to register voluntarily, if you are doing any of the following kinds of business in the UK: -
If you decide to voluntarily register for VAT, you have exactly the same responsibilities as someone who must register. 
If you run more than one business, the sales in all those businesses must normally be added together to determine whether or not you must register for VAT.
VAT officers are responsible for the collection of VAT for the government. They check businesses to make sure that their VAT records are up to date. They also check that amounts claimed from or paid to the government are correct. They examine VAT records, question the business owner or the person responsible for the VAT records and watch business activity.
How often VAT officers visit depends on the size and complexity of your business and your past record of meeting VAT requirements. If you have previously submitted late or incorrect VAT payments or declarations, then VAT officers may visit you more often. 
When a VAT officer arrives, they will identify themselves by name, produce their ID card and explain why they're there. They'll be quick and efficient to keep the disruption to your business to a minimum. First, they'll discuss the various aspects of your business with you. Then they'll examine your business records and, where appropriate, inspect the premises and any goods on the premises.
An accountant or agent (such Coddan CPM) can act on your behalf to submit your VAT Returns and deal with HM Revenue & Customs (HMRC) on other VAT matters. 
All UK EORI numbers start with the letters GB. Most are followed by a twelve digit number based on the EO’s nine digit VAT number with a three digit suffix number at the end, for example GB123456789000. 
Be clear about the impact of VAT on growing your business turnover. Make sure your business plan looks at how you will deal with the impact of registering for VAT. For example, if you provide services to members of the public, registering for VAT may have major implications for your pricing structure. If you do register for VAT, Customs wants to work with you to help make the process as simple as possible. 
You must start keeping records and charging VAT to your customers from the date you know you have to be registered.
If all or most of your taxable supplies, or acquisitions are zero-rated, you may not need to be registered for VAT. This is called exemption from registration. However, you do still need to complete the relevant form if you wish to apply for exemption from registration. If VAT is due on some of your supplies, you must be able to show HM Revenue and Customs that, if you were registered, your input tax would normally be more than your output tax for your application for exemption to be allowed. 
VAT law in the European Community is governed by various Directives, notably the Sixth VAT Directive (1977). 
If you make standard-rated supplies, you have to account to Customs and Excise for the VAT due. This is HM Revenue and Customs output tax. 
When you supply goods on sale or return etc, they have not been sold and you still own them until such time as they are adopted by your customer. Adoption means that the customer indicates a wish to keep them. Until your customer does so, your customer has an unqualified right to return them at any time, unless you have agreed a time limit.
A fixed establishment is an establishment other than the business establishment, which has both the technical and human resources necessary for providing or receiving services permanently present. A business may have several fixed establishments, including a branch of a business or an agency.
A company incorporated in Bermuda has no business or fixed establishment anywhere in the world but its board of directors meet from time to time in different countries, including the UK. 
The measure concerns certain on-going supplies, sometimes described as continuous supplies, examples of which are electricity, piped gas and water, leasing of property and equipment, management services and telephone services. 
At the time when the European Community was created, the original six Member States were using different forms of indirect taxation, most of which were cascade taxes. These were multi-stage taxes which were each levied on the actual value of output at each stage of the productive process, making it impossible to determine the real amount of tax actually included in the final price of a particular product. As a consequence, there was always a risk that Member States would deliberately or accidentally subsidise their exports by overestimating the taxes refundable on exportation. 