How to register for VAT, and invoicing prior to receiving your registration number

When you set up as a limited company contractor, one of the first tasks you carry out will typically be to apply for the company to become VAT registered.

In this article, Linda Phee CA from AccountsNet Limited looks at how the VAT registration process works in practice, and how invoices should be treated while you wait for your registration number.

The VAT application process

A VAT application can be made through the HM Revenue & Customs website or by submitting Form VAT 1 by post to the registrations unit in Wolverhampton.

To apply online you (or your accountant) must be a registered user of HMRC online services (you can apply for a login via the site).

Once the registration process is complete, you can access the site and will be guided through the online VAT application process. You will also receive an immediate on-screen acknowledgement that the application has been received and is being processed.

Alternatively, If you prefer to complete a paper application you can download the form from the HMRC website and send it by post.

Most applications will be processed within one month of receipt although it can take longer if HMRC carry out additional checks.

If you are selected for additional checking you will be notified that the checks will be carried out and may be required to provide additional information to support your application, but in most cases, the checks will be completed within 3 months.

When your application has been processed you will be sent a Certificate of VAT registration, which will include your VAT number.

It is worth noting, that as of 1st April 2010, all newly VAT registered companies have to account for VAT entirely online – by submitting their quarterly return and making the related payment via the web.

Accounting for VAT

You must account for VAT on your income from the effective date of registration on your VAT Certificate. The effective date will be the date from which you are required to register for VAT or the date on your application if you are registering voluntarily.

When issuing invoices to clients, you cannot add VAT to an invoice without being issued with a VAT number.

If you issue an invoice after the effective date, but before you are in receipt of a VAT number, you should state on your invoice that VAT registration is pending and issue the invoice without any VAT. Then, when your application is complete and you have received your VAT number you must then issue another invoice for the VAT element only.

Always remember that all invoices issued which include VAT must show your company’s VAT registration number.

You can find out more about how VAT works in practice for contactors here.