When you run a company, you want to ensure everything is above board. This includes things like compliance, legal, employee handling, and the financial side of affairs. However, with so much to sort out, sometimes you might miss something out.
It can be stressful, but there are ways to find out if you are in line with certain policies and laws. One of the things you might want to check is whether your company is VAT registered. Luckily, it’s not too complicated. Below is everything you need to know about VAT registration for your business and how you can perform a VAT number check.
What is a VAT registration number?
A VAT registration number is a unique identifier which HM Revenue and Customs (HMRC) provides to businesses that have been registered for Value Added Tax (VAT). It is used for tax purposes, allowing businesses to charge VAT on their sales and reclaim the credit paid on purchases as well as deal with their own Input Tax.
The number is usually 9 digits long and may include a ‘GB’ prefix, it helps to ensure that the payment and collection of VAT add up properly by acting as an identifying marker on records for tax purposes. Most businesses will need to show their VAT registration number on most of the processes in which they work.
How to check if a company is VAT registered
To ensure you’re working with a VAT registered company or ensuring your own business is compliant, you can use these methods:
Check via HMRC online services
In the United Kingdom, you can verify online whether a business is registered for VAT through HM Revenue & Customs (HMRC) online services. HMRC has a facility to query company VAT numbers.
It will return a confirmation for the validity of that number and how it points to an existing business. It’s a quick way to check VAT numbers directly with the tax authority, so you can be sure it is realistic. This system is ideal for businesses that regularly checks numbers and would like to conform with tax obligations as well organised financial records.
Use the VIES (Vat Information Exchange System)
Within the EU, it is possible to check through VAT Information Exchange System (VIES) for companies. The online system of the European Commission through which you can validate EU VAT numbers is called VIES. You can verify this by entering the VAT number and checking that it is valid, not de-registered or associated with different business details.
This method is particularly convenient for companies that sell across many different EU-Britain border points, making them comply with the VAT rules and reducing difficulties in adjusting payments.
Contact the company directly
One other way of checking whether or not a business is VAT registered, is to obtain the firms VAT registration number by getting in touch with them. When you have that, the number can be verified at HMRC or VIES. This will not only enable you to get the vital information dealing with VAT but also give an opening in establishing a business connection as well as having further queries answered.
This method is useful when your first online searches do not tell you much, or if you want to double-check whether the company has any tax compliance and legitimacy.
Consult an accountant or tax advisor
Another good option seems to be consulting with an accountant or a tax advisor which might check whether the company is really VAT-registered. It is up to these professionals and their professional resources that give them access to different specialised databases where VAT numbers can be checked.
They can either give you more information on the company tax compliance or help to understand what it means when using VAT number check. This is good for businesses requiring extensive verification in their due diligence process to ensure all financial or legal matters are fully investigated by the industry standards.
Why do you need to check a VAT registration status?
There are several reasons why you’ll need to use a VAT checker in the UK. Here are some of the main ones:
Legal compliance
One of the key factors to determine compliance is making sure that a business has verified its taxation status. It means operating the business within the parameters established by tax authorities like HM Revenue and Customs (HMRC) in the UK. This compliance is necessary in order to maintain the legal structure and financial health of the company.
This can help them sidestep potential legal consequences and fees incurred if businesses trade with unregistered entities, by letting these companies confirm a VAT registration. It also makes sure businesses are contributing to the economy with what they owe in tax.
VAT reclaim
Companies must be authorised for VAT to recover the tax on goods and services required by other registered companies. The use of VAT has been subject to bad tax abuse cases in the past, so valid VAT invoices only from registered businesses can be used for a refund.
Confirming this is important, as you need to be able to show not only that VAT reclaims are valid and correct but also have evidence to avoid disagreements with local tax authorities. It also helps to keep accurate records for the purposes of your accounts and this keeps tax efficient as well saving you from unrequited expenditure.
Fraud prevention
It helps in curbing fraud among businesses when you check the VAT registration status. There are people out there that will simply lie and say they have a VAT registration to sound more official and trustworthy. Verifying VAT registration allows you to keep away from transacting with these fake firms. This ensures some peace of mind to the company and as well as a good image.
Ensuring that fraud will not occur is crucial to comply with customers, suppliers and other stakeholders. It also protects the company from falling into legal and financial trouble by ensuring that all business transactions are done in a clear, fair manner.
Accurate pricing
VAT registered businesses tend to list prices before VAT as standard, saving the customer from undergoing mental calculations. Non-VAT Registered Businesses (or private sellers) include the sales price including all taxes in their initial listing. This classification has implications on cost budgeting, expense estimation and financial planning.
Having the correct understanding of whether a supplier is VAT registered allows businesses to function more efficiently in managing their costs, making sure they are not either paying out too much or getting their sums wrong.
This will also help you to communicate well with your clients regarding the prices, and hence turns into transparency and trust. Pricing is what keeps you in the black (or red), to help with budgeting and pricing decisions which underpin your financial forecasting.
Supply chain verification
Having suppliers who are VAT registered ensures they are legitimate and compliant with regards to taxation. It is particularly essential to ensure a robust and compliant supply chain. A verification routine also enables companies to establish a pool of reliable groups of suppliers which significantly lessens business interruption as it would not be affected by non-compliance.
Not only does it promote your organisational self-monitoring and compliance program but also testifies that all levels of the supply chain comply with legal and regulatory requirements (which thus protects your operations, in this case — your business).
Who is exempt from VAT registration?
As of 2023–2024, the VAT threshold in the UK is £85,000 and anyone with taxable turnover lower than this does not have to register for VAT. In addition, there are goods and services that you do not have to charge VAT on (such as education; financial services; some medical treatments), so it may be the case that registration is unnecessary if covering these exclusively.
In other cases, charities may be exempt. Businesses that are only engaged in VAT-exempt activities or which have deregistered voluntarily (typically because their taxable turnover has fallen below a lower threshold) can also be exempt from registration for VAT.
Need assistance with VAT registration? Contact Reed & Co Accountants today
If you want to become VAT registered yourself or you want help with finding out whether another business is compliant, then Reed & Co Accountants can help. We have all the expertise and know how to ensure everything is within regulation, providing you with peace of mind. Contact us today to get started.
VAT registration FAQs
When do I need to register for VAT?
You must register for VAT within 30 days of realising that your taxable turnover will exceed the VAT threshold within a 12-month period. Failure to register on time can result in penalties.
Can I voluntarily register for VAT?
Yes, businesses can voluntarily register for VAT even if their turnover is below the VAT threshold. This can be beneficial if you want to reclaim VAT on purchases or enhance your business’s credibility.
What happens after I register for VAT?
After registration, HMRC will send you a VAT registration certificate, which includes your VAT number. You’ll need to charge VAT on sales, submit VAT returns, and pay any VAT due to HMRC. You can also reclaim VAT on business expenses.
