VAT is a tax imposed on most goods and services in the United Kingdom. VAT is a consumption tax that is levied at each stage of the supply chain, from production to final sale to the consumer. Businesses registered for VAT must charge VAT on the goods and services they supply and pay the VAT they have charged to HM Revenue & Customs (HMRC).

Once you’re VAT registered, you don’t end up paying VAT on business expenses. You’ll still get charged the VAT-inclusive price when you make the purchase, but you can claim that money back when you file your return with HMRC

To obtain a Partnership UTR (Unique Taxpayer Reference) number in the United Kingdom, you will need to follow these steps:

1. 20% is the VAT rate for most goods and services
2. 5% is applied to some health, energy, heating, and protective products and services
3. 0% is applied to a range of products and services to do with health, building, publishing and kids’ clothing

If your turnover is above £85,000 then you need to register by law, but you can also go for voluntary VAT registration. Registering for VAT lets you reclaim VAT on your purchases. If you pay more VAT than you collect from customers, reclaiming VAT makes up the difference. It also means you’re ready for growth because you won’t need to keep an eye on your turnover. On the other hand, VAT registration means more paperwork, and sometimes you’ll pay more to HMRC (if you collect more VAT from customers than you pay out). It’s best to look at the specifics of your business when deciding whether to register for VAT.

A VAT certificate in the UK is a document that HMRC will send you to prove that your business is registered for VAT. As mentioned earlier, it shows your VAT number, the date you need to submit your first VAT return and pay your bill, as well as the ‘effective date of registration’.

Now you know the basics of how to register for VAT. But during the process, you’ll be asked to identify what VAT accounting scheme you’ll use. The accounting scheme is how HMRC calculates whether you owe VAT, or get a refund.

• Most businesses must use standard VAT accounting: You record the VAT collected on each sale and the VAT paid on each purchase, then submit a VAT return to HMRC every quarter.
• You may be able to use annual VAT accounting: Some businesses can submit a VAT return once a year, however they are still expected to pay quarterly. Those quarterly payments are based on your last return, or an estimate.
• You may be able to join a flat-rate scheme: Certain smaller businesses can skip all the VAT accounting and simply pay a percentage of their turnover as VAT. An accountant or bookkeeper can help you decide if this makes sense for your business.
• You may be able to use a cash accounting scheme: Under cash basis accounting, you’re assumed to have collected or paid VAT when money changes hands. Under all the other schemes, you’re assumed to have collected or paid VAT as soon as an invoice is raised.