BrassTax news

New VAT registrations

It is widely known (and widely deprecated) that HMRC are currently taking a ludicrously long time to process new VAT registrations. What should traders do in the meantime?

The answer is that they must recognise that VAT is chargeable during the interim period between application and registration, and will have to be paid over when the registration eventually goes through. So a trader should start keeping records and ensuring that prices charged to customers reflect the need to account for VAT from the date he knows he has to be registered. He must not of course show VAT separately on an invoice until the VAT registration number is issued: but once that happens VAT invoices can and should be issued to customers as soon as possible after registration.

If VAT is not charged, a trader does not have a legal right to go back to customers to add VAT onto things post-registration. So if he has not added on the VAT he will run the risk that he will in effect himself bear the loss of 7/47 of his income in VAT.