Do I Need to Register for VAT?

VAT (Value Added Tax) is one of the most commonly misunderstood taxes for new and growing businesses in the UK. Depending on your revenue and business activities, you may be legally required to register—or you may benefit from registering voluntarily.

This guide explains when VAT registration is mandatory, what it means for your business, and how Dragonfly Associates can support the process, subject to agreement.

What Is VAT?

VAT is a consumption tax added to most goods and services sold in the UK. When your business is VAT registered:

• You charge VAT on your sales (known as output tax)
• You can reclaim VAT on purchases and expenses (input tax)
• You must submit regular VAT returns to HMRC

The standard VAT rate in the UK is 20%, though reduced rates (5% or 0%) apply to some goods and services.

When Is VAT Registration Mandatory?

You must register for VAT if:

• Your VAT-taxable turnover exceeds £90,000 (as of 2024–2025) in the last 12 months
• You expect to exceed the threshold in the next 30 days alone
• You are trading in the UK and selling taxable goods or services

This applies to UK-based and non-UK businesses with a UK VAT presence. Dragonfly Associates monitors thresholds and advises clients when registration becomes necessary.

Should I Register Voluntarily?

Even if you’re under the threshold, you may choose to register voluntarily. This can be beneficial if:

• You want to reclaim VAT on startup costs and equipment
• Your customers are VAT-registered (so charging VAT is expected)
• You want to enhance your business credibility

However, it also adds administrative obligations—quarterly returns, invoice requirements, and proper recordkeeping. We help you assess whether voluntary registration makes sense based on your business model.

How to Register for VAT

You can register online through the HMRC VAT portal. You’ll need:

• Your company details and UTR (Unique Taxpayer Reference)
• Business activity and trading start date
• Estimated turnover and VAT scheme selection

Once registered, HMRC will issue:

• A VAT registration number
• Your effective date of registration
• Your VAT return schedule

Dragonfly Associates handles the VAT registration process for clients under our accounting and compliance plans, subject to agreement.

Which VAT Scheme Should You Use?

Several VAT accounting schemes are available, including:

• Standard VAT Accounting
• Flat Rate Scheme (for businesses under £150,000 turnover)
• Annual Accounting Scheme
• Cash Accounting Scheme

Each has pros and cons depending on your business type, cash flow, and reporting needs. We guide clients in choosing the right scheme for their circumstances.

After Registration: What’s Required?

Once VAT registered, you must:

• Charge VAT on taxable sales and issue proper VAT invoices
• File VAT returns (usually quarterly)
• Keep digital VAT records (Making Tax Digital compliance is required)
• Pay HMRC any VAT due or reclaim VAT on your expenses

Failure to comply can result in penalties, fines, or deregistration. Dragonfly Associates provides full VAT return preparation and filing services to clients who opt in, where applicable.

Frequently Asked Questions

What if I go over the threshold temporarily?

You still need to register if the threshold is exceeded, even if only briefly. You can apply to deregister later if appropriate.

Can I reclaim VAT on past purchases?

You may be able to reclaim VAT on certain pre-registration expenses (up to 6 months for services, 4 years for goods), depending on conditions.

What happens if I don’t register when required?

HMRC may impose penalties and demand backdated VAT, plus interest.

What is a UTR?

A UTR (Unique Taxpayer Reference) is a 10-digit number issued by HMRC that uniquely identifies your company for tax purposes. You’ll need it when registering for Corporation Tax and filing your tax returns. It’s sent by post shortly after your company is incorporated.

Register With Confidence

VAT doesn’t need to be complicated—but the risks of getting it wrong are real. Whether you’re registering for the first time or deciding if voluntary registration makes sense, it pays to have expert support.

Dragonfly Associates helps UK and international businesses register, file, and manage their VAT obligations with clarity and precision—available as part of agreed service packages.

To discuss your VAT status or begin the registration process, contact us today.