Before starting a new business in the UK, there are several things you need to know – two of which are VAT and VAT numbers. Value-added Tax (VAT) and VAT number are essential for every business in the UK. If you sell in the UK and don’t have a VAT number yet, this is for you. In this article, we introduce VAT, what is company VAT numbers, how to find your company VAT number, and the benefits of applying for a company VAT number. Stay tuned!
If you sell in the UK, chances are you cannot escape VAT registration. There are several aspects of VAT that need to be clarified if you are a novice. Understanding VAT is one part, calculating VAT is another part. However, before anything else, you need to learn the concept of VAT and how to go about the VAT registration process. Don’t know how to go about this? Don’t fret! The VAT registration process is simple and in this article, we will show you how it’s been done.
What Is VAT?
VAT, also known as “Value-added Tax” is a consumption tax charged throughout different production stages. In the EU, VAT is levied incrementally all through a product’s path to market, based on the location of the buyer.
How VAT Works
VAT works in 2 ways – B2C and B2B.
First, we have B2C i.e. Business-2-Consumer. In this case, a consumer is taxed on the purchase of a product or service within the EU. Upon purchase, a Value-added Tax invoice or receipt is generated which the seller collects and keeps until when it is time to remit to the appropriate tax agency.
Second, we have B2B i.e. Business-2-Business. In this case, a business is charged a Value-added Tax on input materials and services. The business then receives a credit for Value-added Tax already paid when it is time to file a tax return.
One thing that certifies that you are a VAT registered company in the EU is a VAT number.
What Is A VAT Number?
A VAT number is a unique identification number and an abbreviation for ‘Value-added Tax”. It is given to businesses by HMRC when they register for VAT. The government uses this VAT ID number to track the VAT activity such as tax credits earned, VAT taxes charged, VAT paid, etc. of registered businesses.
Typically, company VAT numbers begin with an ISO 3166-1 alpha-2 country code, then you have two or more characters, up to 13. VAT numbers may vary from country to country. For instance, in the United Kingdom, VAT numbers are 9 digits long and usually have the prefix ‘GB’.
PS: You may check out the HMRC website to see a list of ID formats from different EU nations.
Why VAT Number Is So Important
Without a valid VAT number from your supplier, it may be impossible to reclaim any charge they may have charged you. HMRC takes VAT issues very seriously and on the slightest errors, you may find your claims ignored or further investigated.
How To Find A Company VAT Number
There are several ways of finding a company’s VAT number but here we shall discuss three.
1. Look at an invoice issued by the company to find the VAT number
The VAT number of the company you are dealing with will most likely be on the invoice it has released to you. If your supplier is registered for VAT, then chances are its unique VAT identification number will be listed on all of its invoices or receipt. If, having paid VAT to the supplier, you still cannot find the VAT number, make sure to contact them immediately.
2. Look for the company's official name online
If you couldn’t find the company VAT number on the invoice, then you can look up the internet for the company’s official name. If you can’t seem to find any result, look for the company’s stock price – it is an easy way to find its official name. After finding its official name, search directories to find a document that may contain the company’s VAT number.
3. Look for the physical address of the company
If you purchased the item online and couldn’t get a VAT number, your best shot would be to search for where the company is based. You can visit the “about us” or “contact us” page on their website or check on any official document for their physical location.
NB: For giant companies like Microsoft which have multiple locations in different countries, ensure to locate the country closest to you. Again, VAT may vary depending on the country.
How To Get VAT Number For Non-Eu Businesses
Below are the determining factors to consider if you want to register a company for VAT EU to sell to private consumers or businesses.
a. You need to register your business and get a VAT number if you ever sell digital products Business-2-Consumer in Europe.
b. You don’t need to register for EU VAT if you only sell digital products in Business-2-Business transactions.
Watch the step-by-step guide below to get a UK VAT number easily.
Top benefits of applying for a VAT number as a non-EU business
In case you are still skeptical about applying for a VAT number, here are a few benefits you can enjoy.
1. Avoid financial penalties – if your business’ taxable turnover exceeds the VAT threshold, you will be fined heavy penalties. Getting VAT number now will save you this humiliation.
2. Build your company reputation – It becomes difficult by the day for international companies to collaborate with small companies that are not VAT-registered.
3. Receive EU-VAT refunds – Only a VAT-registered company or business can claim VAT taxes on products and services they purchased from other businesses. This saves your company more money in the long run.
How To Check Company VAT Number
You can check your company VAT number by:
a. Checking the VIES website
You can enter the registration numbers and country codes into the provided fields to check the validity of a supplier’s VAT numbers in the UK using the EU’s VIES (VAT Information Exchange System).
b. Calling the HMRC VAT helpline
The contact information of all VAT-registered businesses is in HMRC’s possession. If you want to find company VAT number, you can call their VAT helpline [0300 200 3700] if you aren’t sure of a VAT number.
Bonus Tip: Starting An Online Business With Zero Capital
Instead of purchasing an extensive inventory and thinking of how to sell them all, you can easily start a dropshipping business with zero inventories and immediately start making money. One interesting thing about dropshipping is that it ensures fast order processing, especially when you deal with suppliers that have centrally located warehouses. For example, when you use reliable dropshipping platforms like SaleYee.com, be sure that your orders will be processed faster, easier, and safer. The SaleYee platform automates everything just to ensure effective good-service delivery.
SaleYee.com boasts over 30, 000 profitable SKUs that you can import to your store with one click. Orders are shipped within 48hours to any location, thanks to local warehouses situated throughout the world.
Conclusion
There you have it; how to find a company VAT number in the UK. We hope this handy guide will help you better understand what a company VAT number is, why it’s important, and how to check company VAT number.
