When you must register

You must register for VAT if your VAT-taxable turnover in any rolling 12-month period crosses the HMRC threshold, or if you expect to cross it within the next 30 days. The threshold changes from time to time — your accountant tracks it.

Don't wait until you've crossed and missed the registration window. Penalties apply for late registration.

When you might register voluntarily

  • Your customers are VAT-registered businesses who reclaim the VAT.
  • You have significant input VAT to reclaim.
  • You want to look established to clients.
  • You're close to the threshold and want to bed in the rhythm.

For more depth see our voluntary VAT guide.

Pick a scheme

  • Standard accounting — output VAT minus input VAT each quarter. The default.
  • Cash accounting — account for VAT when customers actually pay. Cash-flow friendly.
  • Flat Rate Scheme — fixed % of gross turnover; don't reclaim most input VAT. Simple but not always the cheapest.
  • Annual accounting — one return a year; payments on account. Niche.
Pick deliberately, not by default

The scheme makes a measurable difference. We model Standard vs Flat Rate against your actual cost profile and recommend the better one in writing.

How to register

  1. Apply online through your HMRC account (or your accountant submits for you).
  2. You'll typically receive your VAT number within 1–4 weeks.
  3. Update your invoices with VAT number, VAT rate, and amount.
  4. Update your bookkeeping software for VAT.
  5. Set up a VAT pot — transfer the VAT element of each sale into a separate account.

Your first MTD return

VAT-registered businesses must use MTD-compatible software and submit returns digitally. Your first return covers the period from your effective registration date to the end of your first VAT period. Common mistakes:

  • Forgetting to add VAT to invoices issued after the effective date.
  • Not reclaiming the pre-registration input VAT on assets and services within the allowed lookback periods.
  • Confusing zero-rated and exempt supplies.
  • Missing the deadline (1 month and 7 days after the period end).

Ongoing best practices

  1. Reconcile VAT at least monthly so the quarterly submission is a confirmation, not a calculation.
  2. Diarise the four deadlines a year.
  3. Keep all input VAT receipts — HMRC can ask for them.
  4. Watch the deregistration threshold: if turnover falls and you no longer benefit, you can deregister.
VAT is included on most IGI company plans

Registration, scheme advice and quarterly MTD returns are part of our Standard and Pro plans. See VAT services.