How Long Does VAT Registration Take in the UK?

Thinking about registering for VAT and wondering how long it will take?

The process can vary depending on how you apply, but understanding the timeline and what to expect can help you plan ahead.

This guide will walk you through the VAT registration process, covering the documents you need and the typical processing times. We will also share some tips to help you stay on track and meet all necessary deadlines.

VAT (Value Added Tax) registration is mandatory for businesses whose taxable turnover exceeds GBP 90,000 over the past 12 months or if they expect their turnover to exceed this amount within the next 30 days. [1]

Registering for VAT ensures your business complies with UK tax laws and allows you to reclaim VAT on business expenses, ultimately reducing operational costs.

Even if your turnover is below GBP 90,000, you can voluntarily register for VAT. Voluntary registration offers several benefits.

• Reclaim VAT on expenses: If you pay VAT on business-related purchases, you can claim it back, which could help improve your cash flow.
• Enhance your business credibility: Being UK VAT-registered can make your business look bigger and more trustworthy to customers. 
• Prepare for future growth: If you expect your sales to soon exceed the VAT threshold, you should register now. This can save you time and effort later. 

If you miss the VAT registration deadline, you may incur penalties based on how late you notify HM Revenue and Customs (HMRC). The penalty is calculated as a percentage of the VAT owed, depending on your registration timing. [2]

• 5% penalty for registering within 9 months.
• 10% penalty for registering between 9 and 18 months late.
• 15% penalty for registering more than 18 months late.

There is a minimum penalty of GBP 50.

HMRC will notify you of the penalty in writing and provide details on how to appeal if you believe the penalty is incorrect or unjustified.

Typically, HMRC takes 14 to 30 working days to process your VAT registration after you submit your application. However, the timeline can vary depending on the registration method and the complexity of your application.

Online registrations are generally processed faster than postal applications. Nevertheless, delays can occur if HMRC requests additional information or if there are inconsistencies in your application.

To ensure a quick and smooth VAT registration, follow these steps:

• Submit online: As mentioned earlier, online applications are typically processed faster, so using the HMRC VAT registration service is highly recommended.
• Provide complete and accurate information: Make sure all details, such as your turnover, business address, and financial records, are accurate. Missing or incorrect information will slow down the process. [3]
• Register early: Don’t wait until you’re close to the VAT threshold. Registering early will give you more time to handle any potential issues and prevent last-minute delays.
• Contact HMRC: If you have any doubts or uncertainties about the registration process, it’s best to contact HMRC beforehand. They can clarify requirements and help ensure your application goes smoothly. You can also check the estimated reply date for your query on the HMRC website. [4]

The documents you’ll need for VAT registration depend on the type of your business. [5]

If your business is a limited company, ensure you have the following information ready.

• Company Registration Number: Provided by Companies House.
• Bank Account Details: Your business bank account information for VAT payments and refunds.
• Unique Taxpayer Reference (UTR): A reference number provided by HMRC for Corporation Tax.
• Annual Turnover: Details of your taxable turnover for the past 12 months or projections for the next 30 days.
• Self Assessment Information (if applicable): If you are a director, you may need to provide your Self Assessment details.
• Corporation Tax Information: If applicable, provide details related to your Corporation Tax registration.
• Pay As You Earn (PAYE) Details: If you have employees, you will need to provide your PAYE reference.

If you are an individual (e.g., sole trader or self-employed) or a partnership, you will need to provide the following information to complete your registration.

• National Insurance Number: Required for individuals registering for VAT.
• Identity Document: A valid passport or driving licence.
• Bank Account Details: Your business bank account information is used to process VAT.
• Unique Taxpayer Reference (UTR): If you have one, provide your UTR, which is issued by HMRC.
• Annual Turnover: Details of your taxable turnover for the past 12 months or projections for the next 30 days.
• Self Assessment Information: If you're self-employed, you’ll need to provide your Self Assessment details.
• Payslips and P60: If applicable, you may need to provide recent payslips or P60 for PAYE records.

Once you've confirmed the need to register and gathered the required documents, you can proceed with the registration process.

HMRC recommends that businesses register for VAT through the online portal, as it is the most efficient way to get started. [6]

You will need a Government Gateway user ID and password. If you don’t already have one, you can create it when you sign in for the first time. You don’t need to complete the registration all at once; you can save your progress and return to it later.

Depending on your business type, you may also need to fill out additional forms during the online process.

If you're unable to register online, you can complete the registration by post using the VAT1 application form. This may be necessary if you:

• Are a limited liability partnership (LLP) registering as a representative member of a VAT group.
• Are registering business divisions under separate VAT numbers
• Are applying for a VAT registration exception
• Are an overseas partnership or a local authority
• Are joining the Agricultural Flat Rate Scheme
• Are an insolvency practitioner.

Step 1: Contact HMRC
Call the HMRC helpline to request the VAT1 form. HMRC will assess your situation and, if appropriate, send you the registration form.

Step 2: Complete the Form
Once you receive the VAT1 form, fill it out along with any additional forms specific to your business (such as VAT98 for the Agricultural Flat Rate Scheme or VAT50-51 for a group of companies).

Step 3: Send the Completed Forms to HMRC
Once completed, mail the forms back to HMRC. Be sure to use the correct postal address, which will be provided on the form.

Here’s what you can expect once your VAT registration is complete.

• Receive Your VAT Number: You will receive a 9-digit VAT registration number that must be included on all invoices you issue.
• Business Tax Account: HMRC will provide information on how to set up your business tax account if you don’t already have one. You will need this online account to access the VAT online service.
• Effective Date of Registration: You will be informed of your effective date of registration, which is the date when you must start charging VAT on your sales and filing VAT returns.
• Making Tax Digital (MTD): Unless you are exempt or have applied for an exemption, HMRC will automatically sign your business up for Making Tax Digital (MTD) for VAT, which requires you to submit VAT returns online.

Although you can’t charge VAT, you can adjust your pricing to account for the VAT you will need to pay.

For example, if you enter a GBP 50,000 contract and are approaching the VAT threshold, you can increase the contract price to GBP 60,000 (adding a 20% VAT rate). This allows you to account for VAT in advance.

Once you receive your VAT registration number, you can reissue the invoice showing the correct VAT amount. Your customer won’t need to pay more, but they can reclaim the VAT from HMRC on their next VAT return.

VAT registration is an essential part of running a business in the UK if you meet the required turnover thresholds. So, don’t wait until the last minute to register, and take advantage of VAT registration to reclaim VAT on your business expenses.