VAT Registration in the UK - What You Need to Know

The Value Added Tax (VAT) registration number is a tax identity for UK businesses when they do business in the UK. VAT is also applied on goods and certain services that are imported from places outside of the European community and on goods and services that come to the UK from any other member state of the European Union.

The UK Companies House states that there are three types of rates that are applicable. The standard rate of 17.5 percent is applicable on most goods and services. The reduced rate of 5 percent is applicable on changes in the dwelling, fuel and power that are consumed in the home and charitable institutions and women's sanitary products. The Zero-Rate VAT is for goods and services as follows:

Food not served as meals in restaurants, cafes and as take-away

Children's clothing and shoes

Newspapers and children's books

Certain types of export goods

Prescription medication by a registered chemist

Public transport services.

Incidentally, the standard rate will increase from 17.5 percent to 20 percent from January 2011

VAT is levied when a VAT-registered business sells to either another business or to a non-business customer. When businesses who have registered for Value Added Tax, purchase goods or services they can usually get back the VAT they've paid, from the HRMC. A VAT registered company should be able to produce invoices for goods and services with the VAT registration number on them. The invoices have to be kept as records while buying supplies for the business also. Larger companies usually deal with a company that has a proper VAT registration number; it adds credibility to your business.

It has been seen that nearly 30 percent of application for registration are declined by HMRC due to error in paper work or not filing the form properly. You can make use of an accountant or a company formation agent to make sure everything is done correctly and there are no registration errors.

Find out more exclusive information and help on UK companies house and VAT registration number