Formation Company & Tax Advisory

Monday, July 16, 2018

Opening VAT in United Kingdom (UK)

VAT declarations

The Value Added Tax - VAT is a tax collected by the company following the sale of products or services and concerning the purchase of goods or services that are used in its business.

The administration of VAT in the United Kingdom is in charge of and collected by the Service of Her Majesty's Revenue and Customs - HMRC. The release of VAT is subjected to different times. It is about 6 months long if the person appointed as a representative of the company (the administrator if it is a LTD or LIMITED and/or a member if it is a LLP ) is a resident abroad, it is about 3 weeks if he is a resident in the UK. The procedure for VAT allocation is very complex, so our "Company" when it is in charge, is able to follow the whole procedure, anyway only for companies we provide a Service of accounting management for, or when they have a qualified accountant in the UK. If the company is represented by non-resident individuals in the UK, one must choose and appoint an Individual of our "Company" as his VAT agent.

Why requesting the allocation of VAT?

  • Many new businesses invest a significant portion of their resources during their "Start-Up". The advantage of owning a VAT immediately allows to get the same amount of tax paid on investment incurred back.
  • In some cases, the possession of a VAT can help to strengthen relations with other companies.

The VAT, which consists of nine numbers, is required only since the turnover of the company has overcome or is about to overcome a twelve-month period, a time decided by the British Government that, since April 1st, 2015, has been 82 000 GBP. If it is not expected to exceed this limit, one can avoid to apply for VAT in order to simplify accounting tasks. One must, however, be very careful with this option because if one exceeds the threshold provided without registering for VAT, the financial penalties are very heavy. Many new companies that exceed 82 thousand GBP of estimated revenues during the first year of operation, prefer to register before starting their business activities, thus avoiding to modify their accounting system and product management during the course of their activities.

At the time of registration, the competent office shall transmit to the company a certificate confirming:

  • The number of VAT.
  • The date by which one must submit the first "VAT Statements in United Kingdom - (UK) "and its payment.
  • The effective registration date, i.e. the date of exceedance above or the date on which you registered voluntarily.

Since the date of registration, one must:

  • Charge the rate of VAT on the products and / or services sold.
  • Pay any VAT due to the competent authority.
  • Present "VAT Statements in United Kingdom - (UK) ".Keep VAT books and a VAT account. Records, invoices and receipts must be kept for a period of six years in order to enable the Authority in charge to carry out proper inspections.
  • One can ask for any VAT paid for some purchases which were carried out prior to registration.

VAT rates applied in the United Kingdom since January 4th, 2011 are the following:

  • 20% Ordinary Tax Rate, which is applied to most goods and services.
  • 5% Reduced Rate, which is applied to fuel, households and charities, children's clothing, women's sanitary products and some other oness.
  • 0% Void Rate, which is applied to some products and services where VAT is not demanded, such as food, books, newspapers, stamps, exporting of products.



Bright Business Consulting LLP
58/60 - Kensington Church Street


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