Effective Date of VAT Registration: What Businesses Need to Know

When Do You Need to Register?

A business must register for VAT once its taxable turnover goes above the registration threshold (currently £90,000).

This applies if:

• At the end of any month, taxable supplies in the last 12 months exceed the threshold, or

• The business expects turnover to exceed the threshold in the next 30 days alone.

If turnover doesn’t reach this level, registration is optional. Many businesses, however, register voluntarily to benefit from reclaiming VAT on purchases — particularly where they make zero-rated supplies but still incur VAT on costs.

Voluntary Registration and Start Date

When registering voluntarily, businesses can choose the effective date of their VAT registration.

Why is this important?

• From that date onwards, they must charge VAT on taxable supplies.

• They can also reclaim VAT paid on purchases made on or after the effective date.

• VAT paid on purchases before the registration date cannot be reclaimed.

👉 Example: If a business plans a large purchase and wants to reclaim VAT on it, they should make sure their registration is effective before the purchase is made.

Backdating Registration

A voluntary VAT registration can be backdated by up to four years. This allows businesses to:

• Reclaim VAT on supplies from the backdated date.

• But also account for VAT on all taxable sales made since that date.

This option should be carefully considered, as it may create additional VAT liabilities.

Can You Change the Date Later?

When choosing the registration date, businesses need to plan ahead. Once set, the date is not easy to change:

• HMRC usually won’t allow the effective date to be amended just because it affects pre-registration recovery.

• There is no automatic right to change the date and no right of appeal if HMRC refuse.

This makes it essential to carefully select the most beneficial registration date at the outset.

In summary: Choosing the right VAT registration date is crucial. While voluntary registration offers flexibility — including backdating up to four years — the date affects both how much VAT can be reclaimed and how much must be charged. Businesses should plan strategically before finalising their registration.

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