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When you must register for VAT and when you can choose to register

If you're unsure about whether to register for VAT, this guide will help to answer many of your questions. It explains when you can register, when you must register and the benefits of registering for VAT voluntarily. It also explains the circumstances in which you do not need to register, when you will not be able to register, how to proceed if you do business internationally and why you should not avoid registering for VAT.

On this page:

When you can register for VAT

You can generally register for VAT if you are in business. HM Revenue & Customs (HMRC) generally defines a 'business' as a continuing activity involving getting paid for providing goods or services - in money or another form of payment such as in-kind or barter.

When you are in business

You are in business when, for example:

  • you earn an income by carrying on a trade, vocation or profession; whether by being self-employed or through another entity such as a limited company
  • you provide membership benefits as a club, association or similar body in return for a subscription or other form of payment
  • you provide certain other activities as a club or other recreational body, charity or other non-profit making body
  • when you charge admission to a premises

To be in business, these activities must have a degree of frequency and scale and be continued over a period of time.

When you are not in business

Even if your activities have some or all the characteristics of a business, they may not be considered a business for VAT purposes if they are essentially a recreation or hobby, or an isolated transaction. The one off or infrequent sale of your personal belongings, for example, would fall into this category.

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When you must register for VAT

If you are in business, you must register for VAT if your turnover for the previous 12 months is above £67,000. This is known as the VAT registration threshold. It changes regularly, so you should regularly check your turnover against the current threshold.

You must also register for VAT if:

  • you think your turnover may go over the threshold in the next 30 days
  • you take over a VAT registered business as a going concern
  • you are selling goods into the UK from another country in the EU and exceed the 'distance selling threshold' - see the section below on registration and international trading
  • you acquire goods from other countries in the EU totalling more than £67,000 in a year - see the section below on registration and international trading

Find out more about VAT when you buy a business

More about historical VAT registration thresholds in VAT notice 700/1-11

Find out more about how to register for VAT

Do not avoid registering for VAT by artificially separating business activities

If you run more than one business the sales in all those businesses must normally be added together to determine whether or not you must register for VAT.

However, if you are involved in the running of several separate legal entities, you may not need to combine the sales of those businesses to find whether you need to be VAT registered.

If HMRC decides that you artificially separate one business into smaller parts to avoid registering for VAT, it can decide that the entire business is a single taxable person and therefore must be registered for VAT.

Situations that HMRC may consider a single taxable person for VAT purposes include:

  • Separate entities selling to registered and unregistered customers. The VAT registered business sells only to VAT registered customers and the business not registered for VAT sells to customers who are not registered for VAT.
  • The same equipment or premises being used by different entities on a regular basis. The premises and/or equipment are owned by one of the parties, who charges rent to the others. This situation may occur in businesses such as launderettes and takeaway food operations.
  • Splitting up what is usually a single sale. This is common in industries such the bed and breakfast trade, where one business supplies the bed and another the breakfast.

If you deliberately avoid registering for VAT, you may be liable to a penalty. For serious offences, the matter will be investigated and you may be prosecuted.

Read about what happens if you do not register for VAT on time

Find out more about how to register for VAT

Find out more about artificial separation in VAT Notice 700/1

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When you may register for VAT voluntarily

You may register for VAT voluntarily if:

  • your turnover is below the £67,000 threshold required to register
  • you are starting a new business that has not yet started to trade
  • you are an overseas trader selling goods to UK customers - distance selling - where your sales value is under the relevant threshold
  • your business is in the UK and you supply goods or services only to customers outside the European Union (EU) - but only if you purchase goods or services from UK VAT registered businesses and/or you import goods into the UK on which you could reclaim VAT

Benefits of voluntary registration

There are a number of cashflow advantages of being able to charge VAT on your sales and claim back VAT on your purchases. For example:

  • if you sell zero-rated items and buy standard-rated items you would receive a VAT refund from HMRC
  • if you have not yet sold anything or don't sell anything during a VAT accounting period, you can still claim VAT back on your purchases
  • you have the use of the VAT your customers pay you before you have to pay it to HMRC

Responsibilities of voluntary registration

If you opt for voluntary VAT registration, you must keep all required VAT records and issue VAT invoices. You also have to complete and submit a VAT return at regular intervals, along with your payment or your request for a refund.

Get information about keeping records and accounting for VAT

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When you do not need to register for VAT

There are particular instances where HMRC may excuse you from VAT registration even though you otherwise would need to register.

Your products are primarily zero-rated

If you buy and sell all or mainly zero-rated goods or services, you may apply for an 'exemption from registration'. This may make sense if you pay little or no VAT on your purchases.

You apply for an exemption from VAT registration by filling in a VAT registration form, stating why you are applying for an exemption from VAT registration. If you charge VAT on some of your sales you must also show that the VAT you would reclaim on your sales would normally be more than the VAT you would pay on your sales.

If you are granted exemption, you must inform HMRC of any relevant change in circumstances for instance if you no longer sell mainly zero-rated items.

If you are not granted an exemption, you will become registered for VAT from the day you were otherwise liable to be registered. You will need to account for VAT from that date.

Get information about VAT rates

Find out more about how to register for VAT

Your turnover has only gone over the registration limit temporarily

Even if your turnover has gone over the registration threshold, currently £67,000, HMRC may excuse you from registering for VAT if you can show that your future turnover will be below the deregistration limit, currently £65,000.

Get information about VAT rates

Find out more about how to register for VAT

Get information about cancelling your VAT registration

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Registering for VAT if you do business internationally

Acquisitions of goods from other EU countries

If you acquire goods in the UK from other EU countries worth £67,000 or more and do not intend to use those goods to make taxable supplies, you may have to register for VAT in the UK.

More about acquisitions and registration requirements in VAT Notice 700/1

You can download the application form to register for VAT for acquisitions, but the registration cannot currently be completed online. The form must be printed out for completion, and then sent to the appropriate VAT registration unit.

Get form VAT1B Application for registration - acquisition of goods

Find out more about how to register for VAT

Get information about VAT for international traders

Businesses with no UK place of business selling to UK customers

If you would normally need to register for VAT under UK VAT rules, but you do not have a permanent place of business in the UK, you must still register for VAT in the UK. You will be treated as a 'Non-established Taxable Person' (NETP).
You can download the application form VAT 1 to register for VAT as a NETP, but your registration cannot currently be completed online. You must print the form, complete it, and then send it to:

The Non Established Taxable Persons Unit (NETPU)
HM Revenue & Customs
Ruby House
8 Ruby Place
Aberdeen
AB10 1ZP

Get form VAT 1 ‘Application for Registration’ to register as a NETP

Distance selling from other EU countries to UK customers

If the value of goods that you sell from another EU country to UK customers - distance selling - is £70,000 or more, then you must register for VAT in the UK.

You can download the application form to register for VAT as non-UK business distance selling to UK customers, but the registration cannot currently be completed online. The form must be printed out for completion, and then sent to:

HM Revenue & Customs
Deansgate
62-70 Tettenhall Road
Wolverhampton
WV1 4TZ

Get form VAT1A VAT registration application for foreign businesses distance selling to UK customers

Get information about how to register for VAT as a distance seller

Get information about VAT for international traders

International trade and goods subject to UK excise duty

If you sell goods from another country in the UK which are liable to UK excise duty, such as tobacco or alcohol, then you must register for VAT in the UK regardless of the value of your sales.

Get information about how to register for VAT

Get information about VAT for international traders

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When you will not be able to register for VAT

You cannot register for VAT if you are not in business or if you sell only goods or services that are exempt from VAT.

Find out more about exempt goods and services

Find out more

The HMRC website has detailed information about registering for VAT.

Get HMRC Notice 700/1 Should I be registered for VAT?

Get HMRC Notice 700 The VAT Guide

HMRC also has a VAT helpline which is open from 8.00 am to 8.00 pm, Monday to Friday, on Tel 0845 010 9000.

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