Registering your business for VAT in the UK adds another layer of complexity to your business admin.
Make sure you are aware of the procedures laid out below and use this as a guide to help you in the process, from registering for VAT to getting your first return filed.
What steps are required for VAT registration in the UK?
1. The first step is to actually register for VAT
This can either be done online or with the form VAT1 (if you are a client we will do this for you). If you register online, you will create a VAT online account which you need to submit your VAT returns to HMRC.
2. HMRC will write to you with the following within a few weeks, normally by post:
a. Your VAT number.
b. Confirmation of your first VAT period – this is often a shorter or longer period than the normal 3 months.
3. File your first VAT return
Your first VAT return needs to be filed within 1 month and 7 days of your first period end i.e. a 31st March VAT return needs to be filed by 7th May.
4. File ongoing VAT returns
Returns will normally then be required every three months thereafter.
What do you need in order to file VAT returns?
Before you can file the first VAT return, you will need to:
- Create a HMRC login for your business and add VAT to it (or add VAT to an existing login) here: https://www.access.service.gov.uk/login/signin/creds.
- Register for making Tax Digital (MTD) here: https://www.gov.uk/guidance/sign-up-for-making-tax-digital-for-vat.
- Connect Xero to HMRC by going to Accounting > Reports > Tax > VAT return in Xero and following the MTD prompts/wizard through.
You should then be all set up to file your VAT return directly from Xero, once you have the bookkeeping up-to-date for that quarter.
What should be included in the VAT returns?
Your VAT returns need to include all of your VAT entries for the period in question and your first return can also include:
- VAT incurred on assets purchased in the 4 years prior to VAT registration (providing you still own the assets and have VAT receipts).
- VAT incurred on services provided in the 6 months prior to VAT registration.
When do I need to pay the VAT to HMRC?
Depending on how you pay your VAT, there are different payment dates as follows:
- If you pay by bank transfer, the due date is 1 month and 7 days after the period end i.e. the same date as the VAT return due date.
- If you have set up a Direct Debit for payment, the payment will be taken between the 10th and the 12th of the second month after the VAT period end i.e. a few days after the VAT return is filed.
As you can see, there is quite a lot to think about and get in place. We would, of course, be delighted to help with any of the above – all of which would be covered by us if we were doing your bookkeeping or providing a VAT review for you. If you have any questions or are interested in our services, please do get in touch to find out more.