What to Do While You Wait for a VAT Registration Number
With the increasing delays in obtaining VAT registration numbers from HMRC, it is crucial to know the steps to take while waiting for your VAT number. This guide will help you understand your obligations and ensure that your business remains compliant during this period. Assume You Are Registered from the Effective Date When you apply […]
With the increasing delays in obtaining VAT registration numbers from HMRC, it is crucial to know the steps to take while waiting for your VAT number. This guide will help you understand your obligations and ensure that your business remains compliant during this period.
Assume You Are Registered from the Effective Date
When you apply for VAT registration, its essential to assume that your business is VAT registered from the Effective Date of Registration (EDR) you specified in your application. For example, if you requested to register from 1st June 2023, this date becomes your EDR. Regardless of how long HMRC takes to issue your VAT number, it will be effective from the date stated in your registration form.
Handling Invoices While Waiting for Your VAT Number
Although you must operate as if you are VAT registered from your EDR, you cannot display VAT on your invoices until you receive your VAT number. Here are the steps to manage invoicing correctly:
Charge a Gross Amount: While waiting for your VAT number, charge a gross amount for your goods or services. For instance, if your price is £100 plus VAT, charge £120 as the total amount.
Include a Statement on Invoices: Make sure your invoices include a statement indicating that you are awaiting your VAT number. Use the following example:
“Please note: We have registered for VAT but have not yet received our VAT registration number. Once we receive it, we will issue a valid VAT invoice.”
Re-Issue Invoices Once VAT Number is Received: When HMRC issues your VAT number, re-issue the invoices that were initially charged at the gross amount. The new invoices should reflect the net amount, the VAT, and your VAT number. For example:
Net amount: £100
VAT: £20
Total: £120
Declare VAT on the First VAT Return: Use these re-issued invoices to declare VAT on your first VAT return to HMRC.
Managing Funds and VAT Payments
Charging the gross amount means you collect both the net amount and the VAT from your customers, ensuring you have the funds to pay HMRC once your VAT number is issued. This approach helps manage cash flow and reduces the risk of customers refusing to pay VAT-only invoices later.
Alternative Approach: VAT-Only Invoices
An alternative approach is to initially invoice the net amount and issue a VAT-only invoice once you receive your VAT number. However, this carries a risk, especially with consumer customers who might refuse to pay the additional VAT. Business customers are usually more accommodating, but the safest approach is to charge the gross amount initially and re-issue the invoices later.
Conclusion
Understanding these steps ensures that your business remains compliant while waiting for your VAT registration number. It helps manage cash flow, reduces administrative burdens, and ensures you can pay the required VAT to HMRC promptly.
Should you have any queries or require further assistance, please contact our VAT specialist at Deeks VAT Consultancy. We are here to help you navigate the complexities of VAT registration and compliance.
For expert advice and support, reach out to us today.
+44 710553831
