As your business grows, you may need to register for VAT - either because you’ve exceeded the sales threshold or because you want to take advantage of the benefits it offers. But how long does the process take, and what can you expect along the way? In this guide, we’ll walk you through the process, timelines, and key things to know about VAT registration.
What is VAT?
Value Added Tax (VAT) is a tax that businesses add to most goods and services they sell in the UK. Businesses can reclaim VAT they’ve paid on purchases, helping them cover eligible costs. It’s an important part of staying compliant with tax laws, and for many businesses, it’s essential for managing finances.
What is voluntary registration?
Voluntary VAT registration is when businesses decide to register although their turnover is below the current £90,000 VAT threshold. This option can offer several benefits:
Reclaim VAT on expenses: If you pay VAT on business-related purchases, you can claim it back, which could be helpful for your cash flow.
Boost your business credibility: Being VAT-registered can make your business appear bigger and more established, which can help with building trust among customers.
Prepare for future growth: If you’re expecting your turnover to exceed the VAT threshold soon, registering early can save you time and hassle later on.
However, voluntary registration also means you'll need to start charging VAT on your sales and handle the extra admin involved. So, it’s important to carefully consider whether the benefits outweigh the extra responsibility.
When do you have to register for VAT?
You must register for VAT if:
Your taxable turnover exceeds £90,000 in a 12-month rolling period.
You expect your taxable turnover to exceed the threshold within the next 30 days.
You import goods from the European Union or outside the UK above certain limits.
Voluntary registration is also an option for businesses below the threshold if reclaiming VAT on expenses will benefit them financially. Failing to register when required can result in penalties from HM Revenue & Customs (HMRC).
How long does it usually take?
The time it takes to register for VAT varies depending on how you apply and whether your business details need extra verification. Below is a breakdown of typical timelines:
Option 💡 | Timeframe ⏰ |
|---|---|
Standard online | Approx. 14-30 days |
Complex online applications | Approx. 60+ days |
Paper applications | Several weeks |
1. Online VAT registration
Standard timeframe: Online applications can take between 14 and 30 days to process.
Complex applications: If HMRC has to verify additional information or unusual arrangements, the process may take up to 60 days or more.
2. Paper applications
Paper forms, such as VAT1, may take several weeks longer than online submissions due to slower processing times.
3. Immediate registration needs
Businesses that need urgent registration for reasons like international trading can contact HMRC. They can sometimes do faster processing, though guarantees are not always possible.
💡Editor's insight: “You’ll receive a VAT registration certificate that will include your unique VAT number. You might not realise that you’ll have to put this on invoices and returns. I find this is usually sent via your online VAT account or by post once registration is confirmed.”
What happens if you register late?
Failing to register on time can have serious consequences:
VAT liability backdated: You’ll have to pay VAT on all relevant sales made from the date you should have registered. This tends to happen even if you didn’t charge your customers VAT at the time.
Late registration penalties: HMRC can impose financial penalties. This will depend on how long you delayed registering and the amount of VAT due.
To prevent this from occurring, you should track your turnover closely. Apply for VAT as soon as you approach the threshold.
FAQs
How fast is VAT registration?
VAT registration takes two to four weeks, though HMRC may complete straightforward applications sooner. Complex cases requiring further checks can extend this to several months or more.
Can I charge VAT while waiting for registration?
Yes, you can charge VAT while waiting for your VAT number, but you must inform your customers that your VAT registration is pending. Once you receive your VAT number, you need to issue a correct additional invoice showing the VAT amount.
Do you need a memorandum and articles of association to register?
No, a memorandum and articles of association are not required for VAT registration itself. However, these documents are part of forming a company and are necessary for other legal and financial registrations.
Final thoughts
VAT registration is a vital step for many UK businesses, whether mandatory or voluntary. Knowing how long it takes to register for VAT and understanding how to handle delays can help you stay within the law. Planning and maintaining clear records are key to making the process run smoothly.
Looking for legal advice for your business? Get in touch today to see how one of our small business lawyers can help.
References
How VAT works by Gov.UK
Penalties by Gov.UK
Register for VAT by Gov.UK
Disclaimer: This article only provides general information and does not constitute professional advice. For any specific questions, consult a qualified accountant. Bear in mind that tax rules can change and will differ based on your circumstances.