Registering for VAT: A Step-by-Step Guide for Small Business Owners - ESDG Accountancy

Registering for VAT: A Step-by-Step Guide for Small Business Owners

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If you’re a small business owner, registering for VAT is an important step in managing your finances. VAT, or Value Added Tax, is a tax on the value added to goods and services at each stage of production and distribution. In the UK, businesses with a turnover of over £85,000 per year are required to register for VAT.

In this article, we’ll walk you through the process of registering for VAT, the benefits of registering, and common FAQs.

Why Register for VAT?

Registering for VAT can offer several benefits for small business owners, including:

    • Improved Cash Flow: Once you’re registered for VAT, you can reclaim the VAT on purchases you make for your business. This can help to improve your cash flow.
    • Credibility: Being registered for VAT can add credibility to your business, as it shows that you are a legitimate business that meets certain standards and turnover.
    • Competitive Advantage: If your competitors are registered for VAT, then registering can put you on a level playing field with them. It also means that you can compete for tenders that require VAT registration.

How to Register for VAT

Here’s a step-by-step guide to registering for VAT:

Determine if you need to register for VAT:
The most common requirement to register is if your business has a turnover of over £85,000 per year in the past 12 months. If your turnover is below this threshold, you can choose to register voluntarily. The full conditions can be found here.

Gather your information:
You’ll need to have the following information to hand when registering for VAT:

– Your company registration number
– Your business bank account detail including account number, sort-code
– Your business address and personal address history (3 years)
– Your turnover for the last 12 months and expected future turnover
– Details of any business activities that are exempt from VAT

Register for VAT:
You can register for VAT online using HMRC’s VAT Registration Service. Alternatively, you can register by post using form VAT1.

Wait for your VAT registration certificate:
Once you’ve registered for VAT, you’ll receive a VAT registration certificate from HMRC. This will include your VAT number and the date your VAT registration is effective from.


Q: Can I register for VAT before my turnover reaches £85,000 per year?
A: Yes, you can register for VAT voluntarily if your turnover is below the threshold. This can be beneficial if you want to reclaim VAT on purchases for your business.

Q: How long does it take to register for VAT?
A: If you register online using HMRC’s VAT Registration Service, it can take up to 21 days to receive your VAT registration certificate or longer if there are queries from HMRC. If you register by post using form VAT1, it can take 6 weeks or more.

Q: What happens if I don’t register for VAT when I’m supposed to?
A: If you don’t register for VAT when you’re required to, you may face penalties and interest charges from HMRC via a tax enquiry. These penalties are based on a % of the VAT owed, i.e. 5% or 10%, and get larger over time. If you have delayed registering for VAT when you are supposed to the sooner you act the better, and you should get in touch with a professional advisor who can help minimise any penalty.

Q: When do I submit a VAT return and how do I prepare it?
A: Typically a business must submit and pay their VAT return 1 month and 7 days after each quarter end. This means your bookkeeping will need to be up-to-date for that quarter to be able to submit an accurate return. After the implementation of MTD (Make Tax Digital), all VAT returns must now be submitted with software – most bookkeeping software includes this facility. Many businesses use an accountants services to check and submit their VAT return.


Registering for VAT is an important step for small business owners. Not only does it allow you to reclaim VAT on purchases, but it can also add credibility to your business and give you a competitive advantage. By following our step-by-step guide, you can easily register for VAT and start enjoying the benefits it offers.

ESDG Accountancy can assist with registering your business for VAT including late registrations and submitting VAT returns.


Ed is qualified Chartered Accountant and founded ESDG Accountancy in 2020. He has gained extensive experience in various sectors, working with business owners, international groups, & private equity investors.