Check EU VAT number

Businesses are encouraged to verify the Value Added Tax (VAT) registration numbers of their customers and suppliers on regular basis.

The UK VAT registration number is made up of 9 digits for example 111 2222 33. Your company’s VAT registration number is printed on your VAT registration certificate issued by HM Revenue and Customs (HMRC).

Your VAT registered company must submit VAT returns regularly with HMRC to avoid the VAT registration number being rendered invalid or cancelled. If you require help with preparation and filing of your quarterly VAT returns, our accountants will be more than happy to assist you.

Another reason to verify the VAT registration number is to ensure the VAT registration numbers are genuine and that you are not paying for VAT on your goods and services you bought or sold where you are obliged to.

Only VAT registered businesses are allowed to charge VAT on their sales to their customers.

If you paid for VAT on purchases to suppliers that do not have valid VAT numbers you will not be able to reclaim that VAT amount in your VAT return and HM Revenue and Customs would not issue the refund.

It is best that you check or verify the VAT number before you either remove it from your sale invoice for EC Customers or pay your suppliers who claimed they are VAT registered especially when the VAT amount involved is considerable. This is to avoid scamming and also create awareness and it is a good system to ensure everyone takes part to make sure VAT compliance function as it should be.

Verify VAT numbers – to see it is still valid?

UK limited company registered with VAT do not normally charge VAT to customers from European Countries who can provide valid TVA or VAT numbers.

Before you remove your VAT amount from your sales invoice, it is strongly recommended you verify the TVA or VAT numbers of your customers and note that number on your sales invoices.

Click here to verify – Your VAT or TVA numbers provided by your EC customers or suppliers.

Invalid VAT registration numbers

If VAT or TVA numbers appeared to be incorrect, please inform your customers or suppliers so they are aware and can contact their home country tax office or accountants to verify the situation.

If your customers are highlighting to you that your VAT numbers are invalid, contact your accountants as soon as possible if you have one to verify or you may contact HM Revenue and Customs VAT helpline. They will be able to advice you accordingly.

VAT sale invoice

VAT sale invoice is to be sent to your customers once your company has been issued with a certificate of VAT registration from HM Revenue and Customs (HMRC).

Usually bookkeeping software comes with a standard VAT invoice template. If you have not yet found a suitable bookkeeping software for your business, you may create a VAT sale invoice using Microsoft word document or Microsoft excel spreadsheet.

VAT sale Invoice template

Your VAT sale invoice must include the following information:

  • Your VAT numbers
  • The date of supply – the day when the sale occurred.
  • Type of supply – description of your products and services sold to your customers.
  • Invoice reference number – this reference number must be in chronological order.
  • Total invoice amount including the VAT charge.
  • The VAT amount and the percentage added to the selling price must be displayed separately.

Simple layout of VAT sale invoice

Below is the example of standard layout of sale invoice on what information is required of VAT registered company.

Invoice Date: 02 February 20XX

Invoice number: 0000018

Your company name
business address
Telephone and email

Your VAT numbers: GB123456789

NoDescriptionAmount
1Dormant account filing£250
2Confirmation statement filing£220
Net amount£470
20% VAT£94
Total amount£564

VAT return

Your company is required to submit VAT returns with HMRC.

HMRC will specify your VAT return due date in your VAT registration certificate. Generally, HMRC will set your company to deliver four VAT returns per year, on quarterly basis unless you applied for VAT annual accounting scheme then your company only required to deliver one VAT return per year.

You are to submit your VAT return to HMRC online.

Seek accountants advice or contact HMRC directly if you have any questions filing your VAT return online

VAT and corporation tax

VAT and corporation tax is two different taxes administered by HM Revenue and Customs.

Your limited company is legally required to pay corporation tax if your company has made a profit and submit your corporation tax return with HM Revenue and Customs (HMRC).

If your limited company is registered for VAT with HMRC then your company is legally required to charge VAT to your customers and submit VAT returns to HMRC.

VAT

Let say, your company is selling children clothing, the applicable VAT rate is zero percent, your price for a pair of child’s trouser is £20 and the VAT rate for children’s clothing is zero percent. Your customer will pay you £20.

If your are selling website coding services, you would charge a standard VAT rate of 20% to your customers. Say, your project fee is £1000 and your invoice to your customer would be £1000 + 20% VAT and the final invoice price is £1200. The £200 collected is VAT. This amount is called output tax.

The £200 belongs to HMRC. Your company is technically collecting the VAT on behalf of HMRC. You report this output tax collection in your VAT return.

Corporation tax

Corporation tax is payable if your company has made a profit only. Let use the website coding services business to illustrate how corporation tax is computed. Let say, your company only have one sale that is £1000 + 20% VAT equal to £1200.

When preparing your company account, you book only £1000 as your sale not the whole £1200 because the £200 of VAT belongs to HRMC and it is not your earning. Then you deduct any expenses you incurred to deliver the website coding services, say stationery cost of £150 (excluding VAT). Your profit is £850 (£1000 less £150). The current corporation tax rate is 20%, your corporation tax liability would be £170. Your company would report this tax liability in your corporation tax return called CT600 and submit it to HMRC.

HMRC published the current corporation tax rates .

No double counting of taxes

As you can see from the illustration above, your company would not pay double taxes on your business income. You collect VAT on behalf of HMRC and it excluded from your corporation tax computation.

VAT adjustment for private use

VAT adjustment for private use is to be made when calculating your VAT payable to or refundable from HM Revenue and Customs (HMRC). The rule for claiming all VAT input tax paid on your business expenses are that the expenses must be incurred solely exclusively for your business.

The VAT input tax on the private use cannot be reclaimed and therefore VAT adjustment for private use must be made in your VAT return.

An example of this would be telephone charges where the business is run from home. If a telephone bill was received for £100.00 plus VAT, one third of this would be considered private use. Accordingly, one third of the VAT input tax cannot be reclaimed from HM Revenue and Customs.

The easiest way to account for VAT adjustment for private use is to reclaim all the input tax in the VAT records and when preparing your VAT return make a deduction from the total input tax, disallowing for the private use proportion of the tax that the business is not entitled to reclaim. Do keep a clear record of how the disallowed amounts are calculated. HMRC may ask for the breakdown.

Seek accountants help or contact HMRC directly if you have any questions about VAT return compliance.

VAT margin scheme

VAT margin scheme introduced by HM Revenue and Customs for second hands goods businesses.

You can use the margin scheme if you are selling:

  • Second hands goods
  • Arts
  • Antiques

There are special rules for selling:

  • Used cars
  • Horses and ponies
  • Houseboats and caravans

You cannot use the margin scheme for :

  • precious stones
  • precious metals
  • investment gold
  • item you bought for which you were charged VAT

Calculate the VAT under the scheme

Say, you bought a second hand painting for £20,000 and you sold it for £35,000. Using the margin scheme, you pay VAT at one sixth on the difference (the margin) which is 16.67% thus the VAT amount payable to HMRC is £2,500.

Global Accounting scheme

For high volume and low price items you may use the Global accounting scheme. It is a simplified version of the margin scheme.

Contact HMRC directly if you have any questions about second hands goods VAT scheme.

When not to charge VAT

Company registered for VAT in the United Kingdom must know when to charge and when not to charge Value Added Tax (VAT) to your customers. Generally, you cannot charge VAT on exempt and out of scope products and services.

Out of scope of VAT

Generally, a transaction that is classified as out of scope is excluded from VAT return. This basically mean the transaction is outside the scope of VAT in the United Kingdom. For this transaction, you cannot charge 20% VAT on sales or reclaim any VAT paid to your suppliers.

Examples of transactions classified out of scope of VAT UK are as follows:

  • Where you provide transportation services to a UK and European Unions (EU) customers but the place of the services to be rendered is outside Europe, say in Russia or Malaysia or China or USA.
  • Government statutory fee like London Congestion Charge.
  • Donations to charity.

Zero rated VAT transactions

Selling to customers based in the EU countries are zero rated sales if your customers can provide you with their EU country VAT registration number. In this situation, you put 0% VAT on your sale invoice. This transaction must be included in your VAT return and you must also complete your EC sales List.

You must include your customers’ VAT number on the EC Sales List. Remember to check the EC VAT number for their validity.

Products classified as zero rated in the United Kingdom includes books, newspapers, children’s clothes and shoes and motorcycle helmets. Please do not include these sales in the EC Sales list.

Standard rated VAT

If you are selling to UK customers then you would require to charge VAT on your sales.

An exception is when the services are to be rendered is outside Europe, say a taxi service at Hong Kong airport transfers. This falls under the out of scope category.

Exempt VAT

Some goods and services are exempt from VAT. In other words, no VAT is charged on sales. Examples are insurance, stamps, postage and health care services provided by hospitals.

VAT notice 741/A explains how to determine the place of supply of your services and how to deal with supplies of services which you receive from outside the United Kingdom.

VAT annual accounting

VAT Annual Accounting Scheme is suitable for company with annual sales below £1.35 million. If you opt to join VAT annual accounting scheme, your company only file VAT return once a year.

HM Revenue and Customs will set the estimated VAT liability to be paid by your company based on your previous year VAT return, if applicable.

Payment options and arrangement with HMRC

Your company simply makes VAT payment by direct debit or other approved electronic payment methods.

Your company must specifically request payment options to be on quarterly basis if not it will automatically be on monthly basis.

When to file VAT Return

Your company is required to submit your VAT return two months after your accounting year end together with the balance of VAT payment due.

Flexibility of Annual Accounting Scheme

Your company is entitled to request reduction in the interim payments if your sales is well below your previous year.

Your company may request to withdraw from the VAT annual accounting scheme any time by writing to HMRC.

Advantages of VAT Annual Accounting Scheme

  • The scheme provides your company with more predictable cash flow because your company will make regular payments on account throughout the year.
  • Possible cash flow advantage if your annual sales is foreseeable to increase each year.
  • Cut down substantial administrative work because you only need to send in one return per year

Your company must leave the VAT annual accounting scheme if your annual sales reaching and over £1.6 million.

Other VAT schemes available for business are the VAT flat rate scheme and VAT cash accounting scheme.

VAT cash accounting

VAT cash accounting scheme is suitable for your business, if your annual sales are below £1,350,000.

Under this scheme, you still issue your VAT sale invoice the normal way except you only pay the VAT to HM Revenue and Customs (HMRC) when you received the money from your customers. This VAT scheme can give you significant cash flow advantage.

If you allow credit terms to your customers, you do not have to account for VAT on those sales invoices issued in your VAT returns until you have received the monies from your customers. If your customer never pays you, you never have to pay the VAT over to HMRC. Similarly, you cannot reclaim VAT on your purchases until you have actually paid your suppliers.

Your business must leave the VAT cash accounting scheme when your taxable turnover is more than £1.6 million.

There are other VAT schemes available for businesses, VAT Flat Rate Scheme and Annual Accounting Scheme.

Seek accountants advice if you have questions about VAT cash accounting scheme.

Where to send VAT application

Where to send your VAT application when you apply for VAT by post.

Your business is required to register for VAT once your sales reached the VAT registration threshold. You may also register for VAT on voluntarily.

Your VAT application forms must be sent to the dedicated VAT office that deal with VAT registration if you are applying your VAT number by post.

You may appoint an accountant to handle your VAT application or you may apply directly with HM Revenue and Customs.

VAT application by post

Send your VAT application to the following HMRC office.

HMRC VAT Registration Service
Crown House
Birch Street
Wolverhampton
West Midlands
WV1 4JX

If you have any question about registering for VAT and you do not have representing accountants to deal with your application, you may contact VAT helpline on 0300 200 3700 for advice. They may also be able to help you with questions on how to update your VAT details or request for cancellation of your VAT registered status.

Bought a VAT Registered Business

If you have recently bought a VAT registered business and wish to keep the VAT number, your VAT1 and VAT68 forms must be sent to Grimsby VAT office. The full address is as follows:

Grimsby VAT Registration Unit
HM Revenue and Customs
Imperial House
77 Victoria Street
Grimsby DN31 1DB

VAT flat rate

VAT flat rate scheme set a fixed percentage to be applied when calculating your VAT payable to HM Revenue and Customs.

Your company may opt for VAT flat rate scheme if your annual sales is up to £150,000. Under this scheme, the business is not required to keep records on input tax on every purchase transaction. This may save considerable amount of time on VAT administration. However, businesses still need to keep records of their gross purchases and expenses for corporation tax purposes or income tax purposes.

No record for input tax

Your company charge a standard rate of VAT on sales as usual. The difference of this scheme to that of the standard VAT scheme is that your company does not need to account for input tax on expenses. Your company simply pays a percentage of VAT on sales including all reduced, zero-rated and exempt sales to HM Revenue and Customs.

VAT accounting records

It is high recommended for your company to keep your accounting records the same way as you would if you are under the Standard VAT scheme. This would enable you to monitor and compare if your company is paying more VAT under the VAT flat rate scheme to HMRC. If your company is persistently paying extra VAT, consider opting back to VAT standard rate scheme.

Your company must leave the flat rate scheme when its sales exceeded £150,000.

Calculate VAT payable under VAT flat rate scheme

You multiple your sales inclusive of VAT charged to your customers with the VAT flat rate applicable to your business.

For example, you provide IT consulting services. Your VAT flat rate is 14.5%. Lets say, your income from your consulting business is £10,000 and you charge 20% VAT on top. Your total income inclusive VAT is £12,000. The VAT payable to HMRC would be £1,740.

The VAT rates for businesses approved under the flat rate scheme vary and it is dependent on the business sector you are in.

VAT flat rate percentage by business sector
Type of businessCurrent VAT flat rate
Accountancy or bookkeeping14.5%
Advertising11%
Agricultural services11%
Any other services not listed elsewhere12%
Architect, civil and structural engineer or surveyor14.5%
Boarding or care of animals12%
Business services that are not listed elsewhere12%
Catering services including restaurants and takeaways12.5%
Computer and IT consultancy or data processing14.5%
Computer repair services10.5%
Entertainment or journalism12.5%
Estate agency or property management services12%
Farming or agricultural that is not listed elsewhere6.5%
Film, radio, television or video production13%
Financial services13.5%
Forestry or fishing10.5%
General building or construction services*9.5%
Hairdressing or other beauty treatment services13%
Hiring or renting goods9.5%
Hotel or accommodation10.5%
Investigation or security12%
Labour only building or construction services*14.5%
Laundry or dry cleaning services12%
Lawyer or legal services14.5%
Library, archive, museum or other cultural activity9.5%
Management consultancy14%
Manufacturing fabricated metal products10.5%
Manufacturing food9%
Manufacturing not listed elsewhere 9.5%
Manufacturing yarn, textiles or clothing9%
Membership organization8%
Mining or quarrying10%
Packaging9%
Photography11%
Post offices5%
Printing8.5%
Publishing11%
Pubs6.5%
Real estate activity not listed elsewhere14%
Repairing personal or household goods10%
Repairing vehicles8.5%
Retailing food, confectionery, tobacco, newspapers or children’s clothing4%
Retailing pharmaceuticals, medical goods, cosmetics or toiletries8%
Retailing that is not listed elsewhere7.5%
Retailing vehicles or fuel6.5%
Secretarial services13%
Social work11%
Sport or recreation8.5%
Transport or storage, including couriers, freight, removals and taxis10%
Travel agency10.5%
Veterinary medicine11%
Wholesaling agricultural products8%
Wholesaling food7.5%
Wholesaling that is not listed elsewhere8.5%

*Labour only building or construction services means building or construction services where the materials costs supplied is less than 10% of relevant turnover from such services. If more than this amount, your business is classed as general building or construction services.

Seek accountants advice if you have any questions about VAT flat rate scheme.

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