You must register your business for VAT if you supplied taxable goods and services with a total value of more than £70,000 in the last 12-month period, or if you anticipate supplying taxable goods and services valued at more than £70,000 in the next 30-day period alone.
We are charging a £150.00 fee for VAT form preparation, and this also includes the submission of the VAT registration questionnaire to HM Revenue and Customs, in addition to the receipt of a follow-up questionnaire, which is sent directly to the applicant.
VAT registration takes, on average, 3-8 weeks from the date of submission of a VAT application (depending on the relative efficiency of your local VAT office).
If you wish you can appoint us as your VAT agent and VAT representative.
In order to obtain registration for VAT in the UK however, the company must be able to demonstrate that it is making a taxable supply of goods or services in, or from, the UK.
To apply for VAT registration your company needs to have a corporate bank account in the UK (including sort code and account number). We may help you to open a bank account for just £50.00.
VAT for Non-UK Residents
£ 800.00
You must register your business for VAT if you supplied taxable goods and services with a total value of more than £70,000 in the last 12-month period, or if you anticipate supplying taxable goods and services valued at more than £70,000 in the next 30-day period alone.
We are charging a £150.00 fee for VAT form preparation, and this also includes the submission of the VAT registration questionnaire to HM Revenue and Customs, in addition to the receipt of a follow-up questionnaire, which is sent directly to the applicant.
We are charging a £120.00 per annum to be registered as your tax representative. Coddan will be register with the Inland Revenue and act as the registered tax authuthorised agent for your company.
VAT registration takes, on average, 3-8 weeks from the date of submission of a VAT application (depending on the relative efficiency of your local VAT office).
In order to obtain registration for VAT in the UK however, the company must be able to demonstrate that it is making a taxable supply of goods or services in, or from, the UK.
Alternatively, it is sufficient to show that the company is making supplies abroad that would be taxable supplies if made in the UK. In this case, it is normally prudent to show that the UK company is generating input tax, and does not have a tangible place of business in any other country.
To apply for VAT registration your company needs to have a corporate bank account in the UK (including sort code and account number). We may help you to open a bank account for just £250.00.
VAT Registration: Qualification Criteria
You must register your business for VAT if you supplied taxable goods and services with a total value of more than £70,000 in the last 12-month period, or if you anticipate supplying taxable goods and services valued at more than £70,000 in the next 30-day period alone.
The information required for registering a UK company for VAT is as follows:
Company name and company registration number;
The address of the principal place of business (i.e., where most of the day to day running of the business is carried out);
Description of the business activity;
Name of director/company secretary who will sign the form. Often this can be our nominee, but if not we require the name, residential address and national insurance number of the director;
Proof of intention to trade, i.e., copy of a sales invoice which has been raised to a customer, or a copy of a contract which has been signed by a customer;
Anticipated annual turnover of the business;
Bank account sort code and account number.
Our VAT administration service can complete the VAT returns accurately and deliver them on time saving you a lot of paperwork and financial penalties for late submissions. Please contact us by phone or email for a quote.
WHAT IS VAT? VAT REGISTRATION ONLINE: VALUE ADDED TAX REGISTRATION SERVICE
Value Added Tax (VAT) is a tax charged on most business transactions made in the UK or the Isle of Man. Value Added Tax (VAT) is a general consumption tax assessed on the value added to goods and services. It is a general tax that applies, in principle, to all commercial activities involving the production and distribution of goods and the provision of services. It is a consumption tax because it is borne ultimately by the final consumer. It is not a charge on companies.
Coddan is one of the foremost and most economical providers of private companies formation and Scottish business entities registration services. We offer you company creation service in England & Wales, Scotland and Northern Ireland. We incorporate over 95% of our companies within 6 hours. Electronic submission of information means that we can set-up a company with the required director, secretary, registered office and shareholders.
Our Service Include
We can provide all of the necessary assistance to complete this form efficiently and accurately. We can also advise you with regard to supporting documentation, such as copy invoices and contracts, that you may need to submit to HM Customs with your registration form. Specialised UK VAT registrations for non-UK businesses: the requirement to register for VAT is determined mainly by your business trade and not necessarily the country where your business resides. You may be required to register your company for VAT because you have draw down stock in the UK, or trade over the Internet.
We can help you to register and can assist with the preparation and submission of your VAT Returns. If you are a UK business and you travel to another European Union member country on business, you may be entitled to recover VAT on some of your expenditure. Each European country has different rules about which expenses are recoverable and the rules can be complex. We can assist you to assess any VAT refunds and can compile and submit these claims to the relevant tax authority. UK VAT Registrations: Application for VAT Registration in UK - £150.00
For final VAT application questionnaire - you will receive this document within 10-14 days once your online VAT application submitted to the HM Revenue & Customs. To complete such questionnaire you need to provide the following information about your company: business phone number, business address (except of registered address), business fax number, business banking account details, number of employers. You also will need to provide information where your company is doing business, as well as few incoming and outgoing invoices (from/for behalf of your company).
The following three factors play a part in determining whether or not you need to register:
Taxable Supplies: The supply of any goods and services which are subject to VAT at any rate, including zero-rated, are called taxable supplies.
Distance Sales: Distance selling is when a taxable person in one European Community (EC) Member State supplies and delivers goods to a customer in another EC Member State and the customer is not: registered for VAT, or liable to be registered for VAT. The most common example of distance sales is mail order sales. Acquisitions. If you are an organisation or business, and not a private individual acting in a purely personal capacity, any goods you buy from a VAT registered supplier in another EC country for removal to the UK are known as acquisitions.
If: your taxable supplies, distance sales, or acquisitions are expected to exceed £61,000 in the next 30 days, or if you are already trading, and they have exceeded £61,000 in the past 12 months, or, if you have taken over a VAT registered business as a going concern... Then: you must notify your Customs and Excise local VAT office immediately of liability to register for VAT. If: your taxable supplies, distance sales, or acquisitions are not expected to exceed £61,000 in the next 30 days, and have not exceeded £61,000 in the past 12 months... Then: VAT registration is not necessary in these circumstances although businesses can register for VAT on a voluntary basis to be able to reclaim VAT on purchases.
Voluntary Registration: You can apply to HM Customs and Excise for voluntary registration, even if your turnover is not at the required level. Why would you want to do this and subject yourself to the necessary record keeping and form filling? Well it could save you a lot of money. If you are registered for VAT, it means that you can reclaim the VAT on all your VAT purchases. This will save you 17,5% on most purchases. You must, however, add VAT to all your UK sales. This increases your prices by 17,5%. The decision to register rests on the nature of your client base.
If the majority of your clients are VAT registered, then it is likely that you will be better off if you register. VAT registered clients merely reclaim the VAT in the same way that you do on your purchases and are therefore no worse off. However, if your clients are not businesses but individuals, then it will effectively put up your prices. You must keep records of all supplies you make and receive and a summary of each VAT Period. Records must be kept for six years.
Important VAT Requirements: When your company becomes VAT registered you must comply with the VAT regulations that affect your business. It is beyond the scope of this guide to provide a full analysis of the VAT regulations that affect a given business however here are a few of the key requirements:
When you sell goods or services that incorporate a VAT charge you must supply your customer with a VAT invoice. Generally the VAT invoice should include the VAT amount paid, your companies VAT registration number, a unique invoice number and the date the invoice was raised. You must retain all VAT records including invoices and receipts for a 6 year period. These may be required by law. Remember that a VAT receipt for a purchase you have made through your business is a right to claim back the VAT paid, without this you legally have no right to claim back the VAT. You must notify HM Revenue and Customs within 30 days if any of the details for your company change. You must charge VAT on supplies made to the company's employees or inter-company transactions. You should not claim back VAT on personal expenses. UK VAT Registrations: Application for VAT Registration in UK - £150.00
For final VAT application questionnaire - you will receive this document within 10-14 days once your online VAT application submitted to the HM Revenue & Customs. To complete such questionnaire you need to provide the following information about your company: business phone number, business address (except of registered address), business fax number, business banking account details, number of employers. You also will need to provide information where your company is doing business, as well as few incoming and outgoing invoices (from/for behalf of your company).
The Top VAT Tips: Be clear about the impact of VAT on growing your business turnover. Make sure your business plan looks at how you will deal with the impact of registering for VAT. For example, if you provide services to members of the public, registering for VAT may have major implications for your pricing structure. If you do register for VAT, Customs wants to work with you to help make the process as simple as possible. Monitor your turnover so that you know when you are approaching the VAT registration threshold. Apply to register in plenty of time so that you have your VAT number when you need it.
There are a number of schemes to make dealing with VAT easier. For example, the "cash accounting" scheme means that you only pay the VAT to Customs after your customer has paid you. The "Flat Rate Scheme" can help reduce the time spent on VAT bookkeeping. When you register always ask what schemes are available to make paying your VAT easier.
Always keep your books up-to-date and check accounting documents. Good book keeping is a vital part of good overall business management. It's always better to spend those few extra minutes each day writing things up and filing then properly, rather than sorting out piles of documents at once. Always check documents you receive, for example, you must have a "VAT invoice" to claim back VAT - a "statement" is not a proper invoice. Always enter cash receipts in your books before using the cash to make purchases.
Don't worry if Customs make contact with you. Following these top ten tips you will help you get things right, meaning you need not worry about your VAT affairs. Consequently you should not worry if Customs make contact with you. Customs do contact businesses from time to time and they may want to visit your business. Don't be concerned if Customs visit you, they will tell you why they want to visit and what information they will want to see.
It is also charged on goods, and some services, imported from places outside the European Union and on goods and some services coming into the UK from the other EU countries. All goods and services that are VAT rated are called 'taxable supplies'. You must charge VAT on your taxable supplies from the date you first need to be registered. The value of these supplies is called your 'taxable turnover'.
Some examples of taxable supplies:
Selling new and used goods, including hire purchase; Renting and hiring out goods; Using business stock for private purposes; Providing a service, for example hairdressing or decorating; and Charging admission to enter into buildings.
If you are VAT registered, you will charge VAT on many goods and services you supply to customers in the UK and Isle of Man. VAT does not apply to certain services because the law says these are 'exempt' from VAT. These include loans of money, some property transactions, insurance and certain types of education and training. Supplies that are exempt from VAT do not form part of your taxable turnover. Download Forms:
Live Help: Live Help is a real time "chat" feature which enables you to interact with a customer service representative without a phone call. Get answers to your questions while using our website. Clicking the "Live Help" button will start an on-line session with one of our representatives. Live Help is currently available during normal business hours. Outside of the above opening hours, our business center will be closed. When you click on the button, you will see an e-mail form that will allow you to send us a mail with your questions. Live Help is free! There are no hidden fees. We offer the service as a courtesy to our website visitors.
Dear visitors, while having a chat session with a customer, we are frequently requested to give a piece of advice on tax planning or business structuring. We would like to inform you that it is against our principles to provide online advice pertaining to these issues. The points that may be covered during a session include service description, package or service price, navigation at our website, ways of making an order, methods of payment etc. Yet, if you wish us to provide you with advice on tax or business structuring, you should be aware that this service is chargeable
Do I Have to Register for VAT? If you are in business and your taxable turnover, not just your profit, goes over the registration threshold you become a 'taxable person'. You must then register for VAT. If you don't register at the correct time you could be fined.
You must register for VAT if: At the end of any month the total value of the taxable supplies you have made in the past twelve months or less is more than the current threshold - £61,000; and At any time you have reasonable grounds to expect that the value of your taxable supplies will be more than the current registration threshold - £61,000 - in the next thirty days alone; The current distance selling threshold is £70,000.
What Can I Register As? You can register as a: Sole Proprietor Partnership Corporate Body or Club or Association.
Subject to certain conditions being met, it is possible for two or more corporate bodies to register as a single taxable person, or, where a corporate body, which is organised in divisions and carries on its business in divisions, it may apply to register each division separately.
When will I Get My VAT Registration Number? HM Revenue and Customs will tell you your VAT registration number once they have checked the details of your application. You will receive a certificate of registration showing your full registration details. You should receive our reply within 3 weeks of sending in your form. If they have not replied in this time, contact our National Registration Service to make sure they received your application.
When Must I Start Keeping Records and Charging VAT? You must start keeping records and charging VAT to your customers from the date you know you have to be registered.
You can charge VAT before you are registered but until you have a registration number you must not show VAT as a separate item on any invoice you issue. You can change your prices to include VAT and explain to any of your customers who are also registered that you will be sending them VAT invoices later. Once you have your registration number you should send the necessary invoices showing VAT within 30 days.
If you have asked for voluntary registration you should start keeping records and charging VAT from the date you are registered. This will normally be the registration date you asked for on your application form.
Please note that, once you are registered, you must account for and charge VAT on all your taxable supplies, distance sales, acquisitions and relevant supplies in the UK, regardless of whether those values are above the threshold, for example if you are registered because your distance sales are above the relevant registration threshold, once registered, you must account for VAT on all your taxable income.
VAT Paid Before Registration: Subject to certain conditions you can reclaim any VAT you are charged on goods or services that you use to set up your business. Normally, this will include: VAT on goods you bought for your business within the last 3 years and which you have not yet sold; together with VAT on services, which you received not more than 6 months before your date of registration.
You should include this VAT on your first VAT return.
What Records Must I Keep? You must keep records of all your business supplies and purchases. You should also keep a note of all the VAT you have charged and paid for each period covered by your VAT returns - this is called a VAT account. If you are already in business you will probably find you can use your normal business records to give this information.
What is a VAT Return? The VAT return (Form VAT 100 or Welsh equivalent VAT 100W) is the form you use to notify HM Revenue and Customs of the amount of VAT due on sales, distance sales, etc and the amount of VAT due to you from purchases etc. You will normally receive this every three months. The period covered by this return is called your tax period.
You will need to show the value of the goods you have bought and sold during the period which the return covers, pay any tax due, or claim a repayment if tax is owed to you.
Do I Have to Register if I Live or Work Abroad? If you are resident abroad with a business in this country making taxable supplies, distance sales or acquisitions in the UK you may have to be registered for VAT if their value is over the relevant threshold. Even if you do not make any taxable supplies in the UK but have an establishment here that incurs UK VAT, you may wish to apply for registration on a voluntary basis.
What if I Only Supply Goods or Services Abroad? If you have a business establishment in the UK (including a branch or agency) or your usual place of residence is the UK, but you only supply goods or services to customers based outside of the EC Member States (which would have been taxable if made in the UK), then you are able to register for VAT on a voluntary basis as long as you receive taxable supplies from UK VAT registered businesses or import goods into the UK. If you think you might be able to register, you should phone National Registration Service for further advice.
What if I do not have a UK Business Establishment? If you do not have a UK business establishment, are not normally resident here or in the case of a company incorporated here, you are a non-established taxable person (NETP) but you must still register for VAT in the UK if your taxable supplies exceed the current UK threshold. You may choose one of the following options: appoint an agent or appoint a tax representative. You may Use This Link to Appoint a VAT Tax Representative: Application for VAT Agent Appointment - £500.00
What is an NETP? An NETP is any person who is not normally resident in the UK and who does not have a business establishment here and, in the case of a company, is not incorporated here.
What is a Business Establishment? The best way to explain is with some examples of what we consider are, and are not, business establishments.
What is considered to be a business establishment? Premises from which trading activities directly related to the business are carried out.
(b) What is not considered to be a business establishment? The business address of an accountant or agent. Premises from where a business provides:
Bookkeeping;
Accountancy; or
Invoicing services.
For a non-established taxable person who does not actually make supplies in the UK.In these circumstances we would need evidence of some further business activities to accept an application for registration.
How do I Decide if I am Making a Supply of Goods in the UK? You may be making a supply of goods in the UK if the goods in question have at some stage been physically located here. You may also be making supplies even if you have no place of business here. Examples of supplies of goods in the UK include the sale of goods: Located in the UK and which remain here. Located in the UK for export to a place outside the EC. Located in the UK for removal to another EC Member State. You import into the UK from outside the EC (but if your customer imports the goods, your supply is outside the scope of UK VAT). In the UK which you have acquired from another EC Member State or You install or assemble here.
There are a number of rules for deciding where different types of services are treated as supplied. If the place of supply of your services is the UK, you must normally charge any UK VAT due and pay it to HM Revenue and Customs, even if you do not have a place of business here.
You do not need to register in the UK if you only make supplies of services on which your customer is liable to account for any VAT due under the reverse charge procedure. Where services are transferred between branches of the same company, you may generally disregard the supply for the purposes of UK VAT.
What if I have a Business Establishment in the UK? If you have a business establishment in the UK, you are not an NETP. You will be registered at the address of your principal UK place of business. Your VAT records and accounts should be kept at this address and be available for us to inspect.
You should ensure that someone responsible for your VAT affairs can be available at the address. If that person is an employee, you should give them written authority to act on your behalf.
A separate authority will not be required:
(a) if the name of the person concerned has been notified to the Registrar of Companies under the Companies Act 1985, Part XXIII as a UK resident authorised to accept service of process on behalf of the company or
(b) for a partnership where the person concerned is a partner, resident in the UK.
Appointment and Role of a Tax Representative: If you are an NETP and so have no business establishment in the UK, you may appoint a tax representative.
A tax representative: Must keep VAT records and accounts and account for UK VAT on behalf of the business it represents and Is jointly and severally liable for any VAT debts incurred by the business.
You may only appoint one person at a time to act on your behalf, although a tax representative may act for more than one principal at any time. The representative must keep separate VAT accounts and make separate VAT returns for each principal they represent.
What Must I do if I Appoint a Tax Representative? You must still fill in Form VAT1 application for registration. Also, both you and the person you appoint must complete a Form VAT1TR. This form authorises us to accept that someone else is acting on your behalf. You will need to give your representative sufficient information to enable them to keep your VAT account, make returns and pay VAT on your behalf.
May I Appoint an Agent Instead of a Tax Representative? Yes. Any arrangement you make with someone else to look after your VAT affairs will be subject to whatever contractual agreement you both decide. HM Revenue and Customs cannot hold your agent responsible for any of your VAT debts. HM Revenue and Customs reserve the right not to deal with any particular agent you may choose to appoint and they could still insist that you appoint a tax representative if they believe it necessary in some circumstances.
As with the appointment of tax representatives, with agents: You may only appoint one person at a time to act as your agent (although an agent may act for more than one principal). You must still fill in the appropriate form to apply for registration. HM Revenue and Customs will need your authority before we can deal with your agent. In the case of agents this should be by letter. You will need to give your agent sufficient information to enable them to keep your VAT account, make returns and pay VAT on your behalf.
Exemption from Registration: If all or most of your taxable supplies, or acquisitions are zero-rated, you may not need to be registered for VAT. This is called exemption from registration. However, you do still need to complete the relevant form if you wish to apply for exemption from registration. If VAT is due on some of your supplies, you must be able to show HM Revenue and Customs that, if you were registered, your input tax would normally be more than your output tax for your application for exemption to be allowed.
Input tax is the VAT you pay on the goods and services you purchase for use in the course of your business. Output tax is the VAT you charge on your taxable supplies. If you are allowed exemption from registration, you will not be able to reclaim the input tax you pay when you buy goods or services for your business.
If you make relevant supplies that are zero-rated, you can apply for exemption from registration, by completing the relevant form. You should also enclose a letter confirming your request and explaining why your supplies are zero-rated.
If you are granted exemption from registration you must tell HM Revenue and Customs at any time if your circumstances change, including the nature of the supplies you make, as you may not be entitled to exemption any longer.
Visits by HM Revenue and Customs Officers: From time to time, HM Revenue and Customs may need to inspect your VAT records. This is to ensure that you have accounted for the correct amount of tax at the right time. HM Revenue and Customs will normally contact you before they visit, to arrange a mutually convenient date and time. HM Revenue and Customs officers will also try to deal with any queries you may wish to raise. These visits will be conducted as swiftly as possible with the minimum of inconvenience to your business.
If you have a business establishment in the UK, HM Revenue and Customs will normally visit you there. HM Revenue and Customs will expect your books and trading records to be made available at this address. If you have appointed a tax representative or agent, HM Revenue and Customs will normally visit them.
If you do not have a business establishment and have not appointed a tax representative or agent, HM Revenue and Customs will expect you to make your books and trading records available on request at their Aberdeen VAT office. HM Revenue and Customs will examine your records at this office and then return them to you.
What if I Notify HM Revenue and Customs Late? You may also incur a late registration penalty if you fail to notify HM Revenue and Customs of your liability to be registered by the proper time. The penalty amount will depend on the amount of VAT due and length of time you have taken to notify HM Revenue and Customs.
What if I Deliberately Avoid Registering for VAT? If you deliberately avoid registering for VAT, you may be liable to a penalty equal to the amount of VAT you should have paid HM Revenue and Customs. For serious offences the matter will be investigated and HM Revenue and Customs may bring criminal proceedings.
When will HM Revenue and Customs visit me? This will depend on the size and complexity of your business and your past compliance with legislation. Businesses which send in late or incorrect declarations and payments are visited more often. It is therefore in your interest to ensure that your declarations are correct from the outset.
Tax Avoidance: Tax avoidance is not illegal. However, it can give a business an unfair tax advantage over others, and puts at risk tax simplification measures. We have to take action to counter this and will continue to do so. That action includes the use of litigation, or the introduction of new legislation.
VAT Law: VAT law in the European Community is governed by various Directives, notably the Sixth VAT Directive (1977).
The Directives are given effect in the UK mainly by the Value Added Tax Act 1994 as amended by subsequent Finance Acts. But there are many detailed rules in Statutory Instruments. These are either orders made by the Treasury or regulations made by Customs and Excise. Copies of the Act and of Statutory Instruments are available from Stationery Office bookshops.
Generally speaking, this notice and the other VAT notices explain how Customs and Excise interpret the VAT law. However, sometimes the law says that the detailed rules on a particular matter will be set out in a notice or leaflet published by Customs and Excise rather than in a Statutory Instrument. When this is done, that part of the notice or leaflet has legal force, and that fact will be clearly shown at the relevant point in the publication.
Misunderstanding: In certain circumstances, HM Revenue and Customs may exceptionally take no further action about VAT undercharged by a taxable person as a result of a genuine misunderstanding which does not concern anything clearly covered in HM Revenue and Customs published guidance, or in specific instructions given to that taxable person.
Misdirection: If a Customs and Excise officer, with the full facts before him or her, has given a clear and unequivocal ruling on VAT in writing or, knowing the full facts, has misled a taxable person to that person's detriment, any assessment of VAT due will be based on the correct ruling from the date the error was brought to the taxable person's attention.
Both these concessions can only be applied with HM Revenue and Customs prior agreement. If you think that either of them applies to you, you should contact your local VAT Business Centre.
Complaints: Although HM Revenue and Customs aim is always to provide a high standard of service, sometimes things may go wrong. If they do, HM Revenue and Customs have internal procedures for handling complaints fairly and speedily. Whenever possible, you should try to resolve your complaint on the spot with HM Revenue and Customs officer, but if you are unable to do so you should contact one of HM Revenue and Customs Regional Complaints Units.
If you are not satisfied with the decision, you can ask the Adjudicator to look into your case. The Adjudicator's service is free.
How Does VAT Work? If you make standard-rated supplies, you have to account to Customs and Excise for the VAT due. This is HM Revenue and Customs output tax.
You will normally charge the VAT to your customers. If your customers are registered for VAT and the supplies are for use in their business, the VAT is their input tax. In the same way, VAT charged to you on your business purchases is your input tax.
As a registered person, you can reclaim from Customs and Excise as much of the VAT on your purchases, and imports, as relates to the standard-rated, reduced-rated and zero-rated supplies you make. In principle, you cannot reclaim VAT which relates to any non-business activity or to any exempt supplies you make.
Can I Claim VAT Relief if My Customer Has Not Paid Me? If you make taxable supplies of goods or services to a customer for which you are not paid, you may be able to reclaim relief from VAT on the bad debts.
Imported Goods: When goods are imported into the UK from outside the EC, VAT is normally due at the same rate as on a supply of those goods in the UK.
VAT must be paid when you import the goods or, if you or your agent is approved for duty deferment, you can defer payment with any duty.
Exported Goods: If you export goods to a customer outside the EC, your supply is normally zero-rated provided that you meet the appropriate conditions. There are a number of notices which deal with exports. You will find out more about these, and the conditions which you must meet to zero-rate your supplies.
Some supplies of services to overseas customers are zero-rated, but many are standard-rated.
Intra-EC Supplies of Goods: If you supply goods to a VAT-registered customer in another EC Member State and the goods are removed from the UK to another EC country, your supply may be zero-rated provided you meet the appropriate conditions.
Services from Abroad: If you receive services from abroad, you must take their value into account when working out whether you must be registered. You may still have to be registered, even though you make no other types of taxable supplies or the value of your other types of taxable supplies are below the registration limits.
Goods Supplied on Sale or Return, Approval or Similar Terms: When you supply goods on sale or return etc, they have not been sold and you still own them until such time as they are adopted by your customer. Adoption means that the customer indicates a wish to keep them. Until your customer does so, your customer has an unqualified right to return them at any time, unless you have agreed a time limit.
You may have fixed a time limit of adoption of less than 12 months from the date when the goods were sent.
If a time limit has been fixed for a period of 12 months or less, then the basic tax point is the date when that time limit expires.
If a time limit has not been fixed or fixed for a period of more than 12 months, 12 months from the date when the goods were sent.
In either case if your customer adopts the goods before the time limit expires the date of adoption becomes the basic tax point.
If you receive a payment which is not returnable, this will normally indicate that the goods have been adopted. The payment of a deposit required as a condition of delivery - which is repayable if the goods are returned - does not constitute adoption.
It is your responsibility to make sure that your customers notify you promptly when they have adopted goods.
For VAT purposes, place of supply is the place where a supply is treated as being supplied, or made. This is the place where it is liable to any VAT. There are a number of place of supply rules for determining where services of different kinds are made.
Where the place of supply of services is in a member State of the European Community (EC), that supply is liable to VAT (if any) in that member State and in no other country. If the member State is not the UK, such supplies are said to be "outside the scope" of UK VAT.
Where the place of supply of services is outside the EC, that supply is made outside the EC and is therefore not liable to VAT in any member State (although local taxes may apply). Such supplies are said to be "outside the scope" of both UK and EC VAT.
What Does "Place of Supply" Mean for UK Suppliers? If the place of supply of your services is the UK, you must charge any UK VAT due and account for it to Customs and Excise regardless of where your customer belongs. If the place of supply of your services is another member State, you or your customer will be liable to account for any VAT due to the tax authorities of that country.
Where the place of supply of your services is outside the UK, you should ensure that your records demonstrate that your supplies are eligible for such treatment.
What About VAT Liability? This notice does not cover VAT liability. There is no general relief for the export of services as there is for goods. Services supplied in the UK may be exempt, zero-rated, standard-rated or liable for VAT at a reduced rate.
What Does Business Establishment Mean? The business establishment is the principal place of business and is usually the head office, headquarters or "seat" from which the business is run. There can be only one such place which may be an office, showroom or factory.
Examples of Business Establishment: A business has its headquarters in the UK and branches in France, Italy and Germany. Its business establishment is in the UK. A company is incorporated in the UK but trades entirely from its head office in Bermuda. Its business establishment is in Bermuda.
What is a Fixed Establishment? A fixed establishment is an establishment other than the business establishment, which has both the technical and human resources necessary for providing or receiving services permanently present. A business may have several fixed establishments, including a branch of a business or an agency.
An agency is a separate business which behaves in a similar way to a branch. It acts on the instructions of its principal, often in the principal's name, in the conduct of the principal's business. It includes any business which does not, in function and substance, operate independently of its principal. A business may be the agency of a principal, irrespective of whether it has any authority or capacity to create a legal relationship between that principal and a third party.
However, you are not carrying on a business through an agency if it: acts merely as an intermediary in bringing together customer and provider, but is not directly involved in the supply chain; or supplies only incidental elements such as clerical or typing services.
If you carry on business through a branch or agency, you have a fixed establishment where the branch or agency is located.
Examples of Fixed Establishment: An overseas business sets up a branch comprising staff and offices in the UK to provide services. The UK branch is a fixed establishment. An overseas television company sends staff and equipment to the UK to film for a week. The temporary presence of human and technical resources does not create a fixed establishment in the UK.
A company with a business establishment overseas owns a property in the UK which it leases to tenants. The property does not in itself create a fixed establishment. However, if the company has UK offices and staff or appoints a UK agency to carry on its business by managing the property, this creates a fixed establishment in the UK.
An overseas business contracts with UK customers to provide services. It has no human or technical resources in the UK and therefore sets up a UK subsidiary to act in its name to provide those services. The overseas business has a fixed establishment in the UK created by the agency of the subsidiary.
A company is incorporated in the UK but trades entirely overseas from its head office in the USA, which is its business establishment. The UK registered office is a fixed establishment. A UK company acts as the Operating Member of a consortium for offshore exploitation of oil or gas using a fixed production platform. The rig is a fixed establishment of the Operating Member.
What is Usual Place of Residence? If you have no business or other fixed establishment in any country and your business is a limited company or other corporate body, it belongs where it is legally constituted.
Individuals receiving supplies in a non-business capacity are treated as belonging in the country where they have their usual place of residence. An individual has only one usual place of residence at any point in time. Individuals are normally resident in the country where they have set up home with their family and are in full time employment. They are not resident in a country they are only visiting as a tourist.
Examples of Usual Place of Residence: A company incorporated in Bermuda has no business or fixed establishment anywhere in the world but its board of directors meet from time to time in different countries, including the UK. The company belongs in Bermuda where it is incorporated.
A person lives in the UK, but commutes to France daily for work. He belongs in the UK. Overseas forces personnel on a tour of duty in the UK live in rented accommodation with their families. They have homes overseas to which they periodically return on leave. They belong in the UK throughout their tour of duty.
Why is it Important to Identify the Exact Nature of My Services? It is essential to identify the real nature of a supply of services where general or generic descriptions are used, because it may affect which place of supply rule applies. Sometimes the same term may be used to describe a variety of activities. For example, the term "management services" does not indicate the nature of the services supplied, some of which may fall under the basic rules whereas others may not.
Although reference to your own costs may suggest the nature of your services, you should ask yourself "what am I supplying?". Your invoices should explain the type of services you are actually providing.
When am I an Intermediary? You are an intermediary for the purpose of this section if you act as a third party in arranging, or even simply facilitating, the making of supplies. An intermediary arranges supplies between two other parties; a supplier and that supplier's customer. Intermediaries may be referred to as brokers, buying or selling agents, go-betweens, commissionaires or agents acting in their own name (undisclosed agents). Payments for their services are often described as commission.
In this section, your customer is the person to whom you supply your intermediary services. This can be either the supplier or the recipient of the arranged supply (and in some cases may even be both).
What are Intermediary Services? Intermediaries can be known by a variety of titles, for example they may be described as agents or brokers. Intermediary services involve the making of arrangements for the supply of certain goods or services between two principals: the supplier and the customer. Intermediary services can be supplied either to the supplier (in finding a customer) or to the customer (in finding a supplier), or sometimes to both supplier and customer.
What is the VAT Treatment of Intermediary Services? If you supply intermediary services you need first to establish the place of supply of your services. There are different place of supply rules for intermediary services which depend on the nature of the service which you are arranging.
What if the Place of Supply of My Services is the UK? If you make taxable supplies in the UK above the registration threshold, you are liable to register for VAT. However, if all of your supplies are zero-rated you may apply for exemption from registration. If the value of your supplies is below the threshold you may also register on a voluntary basis.
Tax Point for Certain On-Going Supplies. Who is Likely to be Affected? Connected businesses which delay charging VAT on certain on-going supplies made between them.
General Description of the Measure The measure concerns certain on-going supplies, sometimes described as continuous supplies, examples of which are electricity, piped gas and water, leasing of property and equipment, management services and telephone services.
The time at which a supplier must charge VAT is known as the tax point.
Current tax point rules for these supplies mean that VAT becomes due only when a VAT invoice is issued or a payment is received, whichever is earlier. Some businesses have exploited these rules for the benefit of connected businesses that cannot recover all of their input tax by delaying (sometimes indefinitely) both payment and invoicing.
Where these supplies are made between connected businesses, tax points will be created periodically, in most cases based on 12 month periods, to ensure that accounting for VAT cannot be indefinitely or excessively delayed.
Goods Taken for Personal or Other Non-Business Use: If you take goods out of your business permanently, for non-business use, then the tax point is the time when the goods are taken or set aside for this purpose.
If you take goods out of your business temporarily for non-business use, but they are still part of your stock or business assets, then there is a tax point each time they are used or - if the non-business use continues over a period of time - on the last day of each tax period that the goods are used or made available for that purpose.
What if I Have Separated My Business into Smaller Parts? Where a business has been artificially separated into smaller parts and this results in the avoidance of VAT, HM Revenue and Customs have power to direct that the persons running these activities be treated as a single taxable person and registered.
What is a VAT Invoice and When Should I Issue One? Whenever you supply standard-rated or reduced-rated goods or services to another registered person, you must give that person a VAT invoice.
A VAT invoice is a document containing certain information about what you are supplying. Your customers need VAT invoices to reclaim, as input tax, the VAT you have charged them.
You need not issue VAT invoices for supplies to customers who are not VAT registered. In practice, this will probably mean issuing a VAT invoice to any customers who ask for one, as you will usually have no way of telling whether they are VAT registered or not. You do not have to check that a customer is VAT registered before issuing a VAT invoice.
If your customer pays in cash - not by cheque - you must, if asked, clearly show on the VAT invoice that payment has been received, and the date of receipt.
What Information is Required on a VAT Invoice? VAT invoices must show: An identifying number; Your name, address and VAT registration number; The time of supply (tax point); Date of issue (if different to the time of supply); Your customer's name (or trading name) and address; The type of supply; and A description which identifies the goods or services supplied.
For each description, you must show: The quantity of goods or extent of the services; The charge made, excluding VAT; The rate of VAT; The total charge made, excluding VAT; The rate of any cash discount offered; Each rate of VAT charged and the amount of VAT charged at each rate and shown in sterling; and The total amount of VAT charged, shown in sterling.
Type of supply. You must identify the following types of supply separately: Sale; Hire-purchase, conditional sale, credit sale or similar transactions; Loan; Exchange; Hire, lease or rental; Process (making goods from someone else's materials); Sale on commission (for example, by an auctioneer); and Sale or return or similar terms.
Pro-Forma Invoices: Pro-forma invoices are often used to offer goods or services to potential customers. Such an offer may or may not be taken up, and the goods or services will not be supplied unless payment is received.
If you use pro-forma invoices in this way, they cannot be used as evidence to reclaim input tax, even if they show all the details required for a VAT invoice. You should ensure that they are clearly marked "THIS IS NOT A VAT INVOICE".
Self-Billing: Under a self-billing arrangement, the customer makes out VAT invoices for a VAT-registered supplier and sends a copy to the supplier with the payment.
If you want to use a self-billing system for supplies made to you, you must write to the VAT Business Centre for your area, giving details of the proposed system, and explaining why you need to use such a system in your business. For a self-billing arrangement to be approved, you must satisfy certain conditions, including the need to make sure that your suppliers: Agree to self-billing; and Will not issue VAT invoices for the relevant transactions.
Authenticated Receipts: You should not confuse the use of authenticated receipts with self-billing.
Authenticated receipts are used in the construction industry in place of VAT invoices for supplies of services or of goods and services made under contracts which provide for periodic payments to be made.
The receipts are only valid for VAT purposes if: They are authenticated - that is, signed by the supplier; and No normal VAT invoice or self-billed document is issued for the supplies.
Transmission by Fax: This form of transmission relies on both the supplier and the customer having fax machines.
There is a risk with this form of transmission - that the invoice may not be permanent if your customers have thermal-paper fax machines. More modern fax machines copy onto plain paper and these copies are as permanent as normal paper invoices.
However, thermal paper copies deteriorate over time, and, as a result, your customers may be unable to fulfil their obligation to preserve their invoices for 6 years.
HM Revenue and Customs therefore advise you to warn customers that the invoices may not be permanent if they have a thermal-paper fax machine. Preferably, this should be by a note on the VAT invoice, but it can be in any form practicable to you.
Transmission by E-mail: You may use this form of transmission without the requirements normally applied to businesses who transmit their invoices electronically (EDI).
However, you should notify the VAT Business Centre if you wish to use e-mail to transmit invoices under a self-billing arrangement. This is because there is a danger that the e-mail message can be corrupted during transmission, causing it to be incomplete or indecipherable. The supplier may then receive a document notifying an output tax liability which they cannot read.
Because of this risk of corruption if you use e-mail, please advise customers to contact you if any invoice they receive from you is not satisfactory. Again, this would preferably be by a note on the VAT invoice but it can be in any form practicable to you.
What are the Exceptions? No VAT is charged on taxable supplies made by a business which is not, and is not required to be, registered for VAT. These are known as 'outside the scope' supplies.
VAT does not apply to certain services because the law says these are 'exempt' from VAT. These include loans of money, insurance, certain types of education and training and some property transactions (selling, leasing and letting land and buildings, but not garages, parking spaces, hotel or holiday accommodation).
Supplies that are exempt from VAT do not form part of your taxable turnover.
If the only services you supply are exempt supplies, you can't normally be registered for VAT. If you are registered for VAT and have some exempt supplies you may not be able to get all your input tax back.
How Long do I Need to Keep Records? You must keep all your business records for at least 6 years. If the 6-year rule causes you serious storage problems or undue expense HM Revenue and Customs may allow you to keep some of your records for a shorter period.
Special Arrangements for Small Businesses: If you are a small business, special arrangements are in place to help you when you first have difficulties sending your VAT return or paying on time. You will be sent a letter offering help and support rather than a Surcharge Liability Notice the first time you default. This arrangement is intended to give you extra time to sort out any short-term difficulties before formally entering the default surcharge system. If you default again within twelve months you will receive a Surcharge Liability Notice.
How is the Surcharge Calculated? The surcharge is calculated as a percentage of the VAT that is unpaid at the due date. If you don't send in your return the amount of VAT you owe will be assessed and the surcharge will be calculated as a percentage of that amount.
For the first late payment during a surcharge period the surcharge will be 2% of the tax outstanding at the due date. The rate of surcharge will then increase progressively to 5%, 10% and 15% for further payment defaults in a surcharge period.
VAT AND EU:
The Value Added Tax, or VAT, in the European Union is a general, broadly based consumption tax assessed on the value added to goods and services. It applies more or less to all goods and services that are bought and sold for use or consumption in the Community. Thus, goods which are sold for export or services which are sold to customers abroad are normally not subject to VAT. Conversely imports are taxed to keep the system fair for EU producers so that they can compete on equal terms on the European market with suppliers situated outside the Union.
Value added tax is:
a general tax that applies, in principle, to all commercial activities involving the production and distribution of goods and the provision of services. a consumption tax because it is borne ultimately by the final consumer. It is not a charge on businesses. charged as a percentage of price, which means that the actual tax burden is visible at each stage in the production and distribution chain. collected fractionally, via a system of partial payments whereby taxable persons (i.e., VAT-registered businesses) deduct from the VAT they have collected the amount of tax they have paid to other taxable persons on purchases for their business activities. This mechanism ensures that the tax is neutral regardless of how many transactions are involved. paid to the revenue authorities by the seller of the goods, who is the "taxable person", but it is actually paid by the buyer to the seller as part of the price. It is thus an indirect tax.
What is a taxable person? For VAT purposes, a taxable person is any individual, partnership, company or whatever which supplies taxable goods and services in the course of business. However, if the annual turnover of this person is less than a certain limit (the threshold), which differs according to the Member State, the person does not have to charge VAT on their sales.
How is it charged? The VAT due on any sale is a percentage of the sale price but from this the taxable person is entitled to deduct all the tax already paid at the preceding stage. Therefore, double taxation is avoided and tax is paid only on the value added at each stage of production and distribution. In this way, as the final price of the product is equal to the sum of the values added at each preceding stage, the final VAT paid is made up of the sum of the VAT paid at each stage.
Registered VAT traders are given a number and have to show the VAT charged to customers on invoices. In this way, the customer, if he is a registered trader, knows how much he can deduct in turn and the consumer knows how much tax he has paid on the final product. In this way the correct VAT is paid in stages and to a degree the system is self-policing. The system operates as follows:
Example:
Stage 1. A mine sells iron ore to a smelter. The sale is worth €1000 and, if the VAT rate is 20%, the mine charges its customers €1200. It should pay €200 to the treasury, but as it has bought €240 worth of tools in the same accounting period, including €40 VAT, it is only required to pay €160 (€200 less €40) to the treasury. The treasury also receives the €40 and now gets €160 making €200 - which is the correct amount of VAT due on the sale of the iron ore.
Supply: €1000 VAT on supply: €200 VAT on purchases: €40 Net VAT to be paid: €160
Stage 2. The smelter has paid €200 VAT to the mine and, say, another €20 VAT on other purchases, such as furniture, stationery, etc. So when the smelter sells €2000 worth of steel it charges €2400 including €400 VAT. The smelter deducts the €220 already paid on his inputs and pays €180 to the treasury. The treasury receives this €180 from the smelter plus €160 from the mine, plus €40 paid by the supplier of tools to the mine, plus €20 paid by the furniture/stationary supplier to the smelter.
Supply: €2.000 VAT on supply: €400 VAT on purchases: €220 Net VAT to be paid: €180
€180 (paid by the smelter) + €160 (paid by the mine) + €40 (paid by the supplier to the mine) + €20 (paid by the supplier to the smelter) = €400 or the correct amount of VAT on a sale worth €2000.
VAT Coverage and VAT Rates: Given that EU law only requires that the standard VAT rate must be at least 15% and the reduced rate at least 5% (only for supplies of goods and services referred to in an exhaustive list), actual rates applied vary between Member States and between certain types of products. In addition, certain Member States have retained separate rules in specific areas.
The most reliable source of information on current VAT rates for a specified product in a particular Member State is that country's VAT authority. Nevertheless, it is possible to get an overview of the different rates applied from the VAT rates in the European Union information document.
VAT on Imports and Exports: For the purpose of exports between the Community and non-member countries, no VAT is charged on the transaction and the VAT already paid on the inputs of the good for export is deducted - this is an exemption with the right to deduct the input VAT, sometimes called 'zero-rating'. There is thus no residual VAT contained in the export price.
However, as far as imports are concerned, VAT must be paid at the moment the goods are imported so they are immediately placed on the same footing as equivalent goods produced in the Community. Taxable people registered for VAT will be allowed to deduct this VAT in their next VAT return.
VAT on Goods Moving Between Member States: No frontier controls exist between Member States and therefore VAT on goods traded between EU Member States is not collected at the internal frontier between tax jurisdictions.
Goods supplied between taxable persons (or VAT registered traders) are exempted with a right to deduct the input VAT (zero-rated) on despatch if they are sent to another Member States to a person who can give his VAT number in another Member State. This is known as an "intra-Community supply". The VAT number can be checked using the VAT Information Exchange System (VIES).
The VAT due on the transaction is payable on acquisition of the goods by the taxable customer in the Member State where the goods arrive. This is known as "intra-Community acquisition". The customer accounts for any VAT due in his normal VAT return at the rate in force in the country of destination.
How do the Member States Apply for VAT? The detailed application of VAT varies according to the administrative customs and practices of each Member State within the framework set out by Community legislation.
Why do all Member States use VAT? At the time when the European Community was created, the original six Member States were using different forms of indirect taxation, most of which were cascade taxes. These were multi-stage taxes which were each levied on the actual value of output at each stage of the productive process, making it impossible to determine the real amount of tax actually included in the final price of a particular product. As a consequence, there was always a risk that Member States would deliberately or accidentally subsidise their exports by overestimating the taxes refundable on exportation.
It was evident that if there was ever going to be an efficient, single market in Europe, a neutral and transparent turnover tax system was required which ensured tax neutrality and allowed the exact amount of tax to be rebated at the point of export. As explained in VAT on imports and exports, VAT allows for the certainty that exports there are completely and transparently tax-free.
The history of VAT in the European Union until 1993. On 11 April 1967 the first two VAT Directives were adopted, establishing a general, multi-stage but non-cumulative turnover tax to replace all other turnover taxes in the Member States. However, the first two VAT Directives laid down only the general structures of the system and left it to the Member States to determine the coverage of VAT and the rate structure.
It was not until 17 May 1977 that the Sixth VAT Directive was adopted which established a uniform VAT coverage. This guarantees that the VAT contributed by each of the Member States to the Community's own resources can be calculated. It still however, allowed Member States many possible exceptions and derogations from the standard VAT coverage. Moreover, it did not set out the rates of VAT to be applied in Member States with the result that these differ widely even today. Currently, there is a standard rate of between 15% and 25% (the maximum is based on a political commitment) and Member States may apply 1 or 2 reduced rates of at least 5%. There are a number of temporary derogations, e.g. zero rates in the United Kingdom and Ireland. The VAT coverage also still differs from one Member State to another.
VAT and the Single Market - 1993 to Now: The realisation of the single market in 1993 resulted in the abolition of controls at fiscal frontiers. To achieve this, the Commission proposed moving from the pre-1993 "destination based" system, where VAT is effectively charged at the rate of VAT applicable where the buyer is established, to an "origin based" system, with VAT being charged at the rate in force where the supplier is established. This would have effectively abolished fiscal frontiers within the EU.
This was, however, not acceptable to Member States as rates of VAT were too different and there was no adequate mechanism to redistribute VAT receipts to mirror actual consumption.
Therefore, until the conditions were right the Community adopted the Transitional VAT System which maintains different fiscal systems but without frontier controls. The intention is still eventually to have a common system of VAT where VAT is charged by the seller of goods - an origin based VAT system. The transitional system is an origin based system for sales to private persons who can go and buy tax paid anywhere they like in the Union and take the goods home without having to pay VAT again. There are some exceptions to this general rule however (e.g. the purchase of new means of transport and distance selling). For transactions between taxable persons it is still a destination based VAT system.
Check Your Order Status
£ 150.00
You must register your business for VAT if you supplied taxable goods and services with a total value of more than £70,000 in the last 12-month period, or if you anticipate supplying taxable goods and services valued at more than £70,000 in the next 30-day period alone.
We are charging a £150.00 fee for VAT form preparation, and this also includes the submission of the VAT registration questionnaire to HM Revenue and Customs, in addition to the receipt of a follow-up questionnaire, which is sent directly to the applicant.
When you sell goods or services that incorporate a VAT charge you must supply your customer with a VAT invoice. Generally the VAT invoice should include the VAT amount paid, your companies VAT registration number, a unique invoice number and the date the invoice was raised. 
