What To Do While You Wait For A VAT Registration Number

Given the length of time it is taking to get VAT registrations in place it is important to advise clients what they should be doing while waiting for their VAT number.

When applying to VAT register clients, please make it clear to them that they should assume that they are VAT registered from the date requested on the VAT registration application.  

If you apply to register a client from 1st June 2023, this becomes the client’s Effective Date of Registration (“EDR”) and while it may take 6 months for HMRC to issue a VAT number, it will be with effect from 1st June 2023 as per the date stated on the registration form. 

Any delays from HMRC in advising you what your VAT number is, does not change the clients EDR.

Please note: The business cannot show VAT on its invoices until it has a VAT number. However, it can charge a gross amount initially, so that when the VAT number is received, it can then re-issue those invoices showing the VAT. 

The business should include a statement on the invoices as follows: 

“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”. 

For example, the business makes a sale while waiting for its VAT number and it charges £120 on the invoice (just a gross amount). The business has thus collected both the net (£100) and the VAT (£20) but not called it VAT or shown VAT anywhere. The customer pays the business £120. 

When the business has been issued a VAT number several months later from HMRC, it should re-issue that invoice but now showing £100 net + £20 VAT = £120 and the VAT number. Therefore, providing its customer with a valid VAT invoice. 

This invoice should be used to declare VAT on the business’s first VAT return to HMRC. 

This is extra admin but means the business is collecting the VAT from the customer at time of sale and will have the funds to pay HMRC once VAT number is issued. 

Alternatively, the business can invoice the client for £100 and then a VAT number is received, it can then issue a VAT only invoice for £20. However, the risk here is that the customer might refused to pay on the basis that it has already paid, especially if it is a consumer customer. A business customer will usually have no issue paying a VAT only invoice, but either way it is a risk, which is why HMRC’s guidance advises charging the gross amount and issue the proper invoice later.

Should you have any queries regarding this matter, please contact

Jane Deeks

VAT Specialist

07710 553831

jane@deeksvat.co.uk