According to the UK law, it is not legal for the company to operate (run business) in UK if the business’ VAT taxable turnover is above certain thresholds (£85,000 for VAT registration). These thresholds are further explained in the table below:

VAT thresholds

Circumstance Threshold VAT registration More than £85,000 Registration for distance selling into the UK More than £70,000 Registration for bringing goods into the UK from the EU More than £85,000 Deregistration threshold Less than £83,000 Completing simplified EC Sales List £106,500 or less and supplies to EU countries of £11,000 or less

VAT accounting scheme thresholds

VAT accounting scheme Threshold to join scheme Threshold to leave scheme Flat Rate Scheme £150,000 or less More than £230,000 Cash Accounting Scheme £1.35 million or less More than £1.6 million Annual Accounting Scheme £1.35 million or less More than £1.6 million

However, it may be difficult for a business to check if their business-counterpart is registered for VAT or not. Don't worry! DNS Accountants can help businesses identify if a company is registered for VAT or not. If a business is dealing with a new supplier or customer or looking to expand their business and want to verify if the value added tax registration number (VRN) they have supplied is legitimate, there are two ways to do so: Either businesses can opt to call the HM Revenue and Customs (HMRC) VAT Helpline, or use the digital platform i.e. online VAT Information Exchange System (VIES) which is managed by the European Commission. Let's understand these a little better

Making a call to HMRC VAT Helpline

In order to verify if a VAT registration number is valid or not, businesses can opt to call the HM Revenue and Customs (HMRC) value added tax(VAT) Helpline on 0300-200-3700 (the call can be made anytime between 8am and 8pm throughout the week). However, there are certain limitations with this method. Firstly, HMRC can only provide verification on the VAT number for businesses registered in the UK. Additionally, the limited time-frame or opening hours of the VAT Helpline can also be a challenge for businesses in the UK. There may be certain instances when the business may want to enquire about the VAT number outside the helpline working hours, or it may take time to speak or strike a conversation with a member of the staff

Making use of the digital platform - online VAT Information Exchange System (VIES)

Apart from making a call to HMRC VAT helpline, businesses in the UK can use the digital platform i.e. online VAT number validation service offered by the value added tax (VAT) Information Exchange System (VIES). The VIES portal (managed by the European Commission) helps a business to verify the legality of a VAT registration number for any business in the EU. The VIES portal uses real-time data feeds from all the member states' VAT systems in the UK; hence the information provided is upto date at all times. The prime reason to set-up the VIES service was to counter the increasing threat of 'carousel fraud', whereby not guilty individuals and businesses in the UK find themselves trapped in a chain of deceitful transactions

To access the European Commission's VIES to authenticate a VAT number, please click or contact DNS Accountants in Harrow in case of any assistance required. Once the business opens the VIES website, they can select from the drop-down menu (member-state & VAT number and requester member state & VAT number). The business will provide details pertinent to the country where the business is situated, and then enter the VAT registration number that needs to be verified. The site will then let the business know whether the number is valid or not. According to VIES portal, "Businesses can confirm the legality of a VAT number issued by any Member State by choosing the Member State from the drop-down menu provided, and then entering the VAT number to be validated." If it is a legitimate VAT registration number, the VIES portal will substantiate it and provide the name and registered office of the business

VAT number in the drop-down box

A VAT number comprises of 15 alphanumeric characters with the initial two representing the nation in which the business is registered. All the countries in the European Union (EU) currently follow two letter country codes:

Austria (AT); Belgium (BE); Bulgaria (BG); Cyprus (CY); Czech Republic (CZ); Germany (DE); Denmark (DK); Estonia (EE); Greece (EL); Spain (ES); Finland (FI); France (FR); United Kingdom (GB); Hungary (HU); Ireland (IE); Italy (IT); Lithuania (LT); Luxembourg (LU); Latvia (LV); Malta (MT); The Netherlands (NL); Poland (PL); Portugal (PT); Romania (RO); Sweden (SE); Slovenia (SL); Slovakia (SK)

To verify if a UK VAT number is legitimate, businesses should first check if the number is 9 digits long (excluding the country code (GB) stated at the beginning). The initial 7 digits are unsystematic numbers and the last 2 digits are derived from a formula using the initial 7 numbers

Member State Number of characters Austria 9 Belgium 10 Bulgaria 9 or 10 Cyprus 9 Czech Republic 8, 9 or 10 Denmark 8 Estonia 9 Finland 8 France 11 Germany 9 Greece 9 Hungary 8 Ireland 8 Italy 11 Latvia 11 Lithuania 9 or 12 Luxembourg 8 Malta 8 Netherlands 12 Poland 10 Portugal 9 Romania 2 to 10 digits Slovakia 10 Slovenia 8 Spain 9 Sweden 12

Getting detail about a business

Businesses in the UK can get several details about a company for free, including:

company information, e.g. date of incorporation and registered address

prior company names

present and resigned / retired officers

document images

data for mortgage charge

bankruptcy information

Additionally, there is a £1 charge for related business documents, such as annual returns; annual reports; company accounts, and confirmation statements. A business in the UK will have to register to obtain these documents. In order to make the payment, businesses in the UK can either use their credit/debit card or PayPal

Why is VAT registration number imperative

Businesses in the UK can only get back VAT on supplies if they have an applicable VAT invoice from a seller. The particulars that need to be present on a legitimate VAT invoice include; the name and address of the business, auto-generated exclusive invoice number, the value added tax (VAT) registration number of the company or business, a narrative of the goods or services offered and the date of payment (creditor turnover period). Before a company or business claims back the VAT, they should make certain that all the above mentioned minutiae are shown on the invoice. It is also a best-practice to verify the supplier's VAT number, particularly when a business is claiming back a large amount of VAT. Businesses which are not in-line with the guidelines might face challenges; HMRC can decline the request to reclaim the VAT

Working with DNS Accountants

DNS Accountants are a leading professional services company based in the UK. The company provides taxation and accountancy services for plc (public limited companies), private limited companies, freelancers, and contractors. The services offered by our learned team include:

Regular tax advice throughout the year

Dedicated accountant with direct telephone number and email address

Regular bookkeeping service and access to our online accounting solution, Nomisma

Completion of any personal taxation returns; advice on VAT returns and filings; compute and advice on PAYE payments

Handling correspondence with HM Revenue and Customs (HMRC)

Company formation formalities at Companies House and opening a customer bank account

To reclaim VAT, DNS Accountants help businesses valid a VAT invoice. The information that needs to be included on a valid VAT invoice includes:

Amount of VAT charge

Date

Details of the product or service supplied

Supplier's name and address

Supplier's VAT registration number

Total cost excluding VAT

Supplier's invoice number

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