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CA Vikram Jain

CA Vikram JainE- Commerce is all about… Growing Fast… or Dying Slow…!!


If you sell goods in United Kingdom, it is likely that you will be required to register for Value Added Tax (VAT). VAT in the United Kingdom is a tax on consumer spending. It is collected by VAT-registered traders on their sales within the EU territory, and passed on to the national tax authorities via VAT tax return filings.

You shall be required to get a UK VAT number if you comply with any One of the below mentioned conditions:

  1. You store your inventory in a warehouse situated in United Kingdom,
  2. You have your own showroom/ warehouse/ place of business in United Kingdiom,
  3. Your annual sales in United Kingdom exceeds £83,000/- during the financial year i.e. from April of current year to March next year.

You must register for VAT with HM Revenue and Customs (HMRC) if your business’ VAT taxable turnover is more than £83,000/-.

When you register, you’ll be sent a VAT registration certificate. This confirms:

  • your VAT number
  • when to submit your first VAT Return and payment
  • your ‘effective date of registration’ – this is the date you went over the threshold, or the date you asked to register if it was voluntary

You can register voluntarily if your turnover is less than £83,000, unless everything you sell is exempt. You’ll have certain responsibilities if you register for VAT.

Your VAT responsibilities: From the effective date of registration you must:

  • charge the right amount of VAT
  • pay any VAT due to HMRC
  • submit VAT Returns
  • keep VAT records and a VAT account

You can also reclaim the VAT you’ve paid on certain purchases made before you registered.

While you wait you can’t charge or show VAT on your invoices until you get your VAT number. However, you’ll still have to pay the VAT to HMRC for this period.

You should increase your prices to allow for this and tell your customers why. Once you’ve got your VAT number you can then reissue the invoices showing the VAT.


For UK VAT registration, you need to provide details like:

  • Expected Annual turnover,
  • business activity and
  • bank details.

Your registration date is known as your ‘effective date of registration’. You’ll have to pay HMRC any VAT due from this date.

You should get a VAT registration certificate within 14 working days, though it can take longer.

You can appoint an accountant (or agent) to submit your VAT Returns and deal with HMRC on your behalf.


You must register for VAT with HM Revenue and Customs (HMRC) if your business’ VAT taxable turnover is more than £83,000/-.

VAT taxable turnover is the total value of everything you sell that isn’t exempt from VAT.

You must register for VAT with HM Revenue and Customs (HMRC) if it goes over the current registration threshold in a rolling 12-month period. This isn’t a fixed period like the tax year or the calendar year – it could be any period, eg the start of June to the end of May.


There’s a time limit for backdating claims for VAT paid before registration. From your date of registration the time limit is:

  • 4 years for goods you still have, or that were used to make other goods you still have,
  • 6 months for services

You can only reclaim VAT on purchases for the business now registered for VAT. They must relate to your ‘business purpose’. This means they must relate to VAT taxable goods or services that you supply.

You should reclaim them on your first VAT Return (add them to your Box 4 figure) and keep records including:

  • invoices and receipts
  • a description and purchase dates
  • information about how they relate to your business now


When to tell HMRC: You need to tell HM Revenue and Customs (HMRC) about any changes to the following within 30 days or you could face a financial penalty:

  • the name, trading name or main address of your business
  • the accountant or agent who deals with your VAT
  • the members of a partnership, or the name or home address of any of the partners

Changing bank details: You must tell HMRC at least 14 days in advance if you’re changing your bank details.

You’ll also have to tell your bank to change your Direct Debit details if you pay your VAT by Direct Debit, but you shouldn’t do this within 5 banking days before or after your VAT return is due.

You must write to the Annual Accounting Registration Unit to change your Direct Debit details if you use the Annual Accounting Scheme. Include your registration number.

Death and illness: You must tell HMRC within 21 days if you take on the VAT responsibilities of someone who has died or is ill.

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June 2024