How to get your company up and running with VAT once your VAT application has been made.
(1) Your VAT application
Unless notified otherwise, we complete all our clients VAT applications online with HMRC. This usually takes 4-8 weeks from the date of submission.
(2) VAT notification from HM Revenue and Customs
Unfortunately the HMRC do not notify us of your VAT number, you will receive a ‘registration approved’ letter in the post once the registration has been processed, you will need to send us a copy of this by email.
Once we receive these details we will update your No Worries account to ensure VAT is included on all future invoices.
(3) MTD
MTD is legislation from HMRC that means VAT-registered businesses above the VAT threshold (currently £85,000) must submit their VAT returns via software and keep their VAT records digitally. It came into effect on 1 April 2019. You will receive an email from No Worries, as well as the HMRC, once this has been done.
In order for us to get authorised with the HMRC to submit your VAT returns through the MTD (Making Tax Digital) system, you will need to create an HMRC Business Tax Account. It is best that you do this now to avoid any delay with submitting your first return. Please see: Creating an HMRC Business Tax Account – No Worries Help Centre (no-worries.co.uk)
(4) Contact your agency
Your agency/recruiter will need to be informed that your limited company is now registered for VAT. They may require you to send them a copy of your new VAT certificate.
(5) Preparing any invoices that have no VAT charged
Often you will have received your VAT registration details after the Effective Date of Registration. What this means is you may have presented your agency/recruiter with an invoice after the effective date of registration. Any invoiced work undertaken on or after the effective date of registration must have VAT included, so to catch up with this you will have to follow the below steps – .
Step 1 – Create a single Credit Note with multiple lines that refers to each Invoice that you have previously created and not yet billed the VAT for. This Credit Note must be dated before your VAT registration date.
Step 2 – Create a single new invoice with multiple lines that refers to the Invoices you included in the Credit Note above. This Invoice must be dated on or after your VAT registration date – our software will now automatically add the VAT due.
Step 3 – Let us know once you have done this and we will apply any payments you received on your old Invoices form Step 1, to the new Invoice you created in Step 2.
Step 4 – Present your agency/client with the Invoice you prepared in Step 2. This will show the total amount due, total payments received so far, and any amounts still owing.
For example, Ella has worked through her limited company for 8 months, and invoices weekly. She decides to register her company for VAT, and receives her VAT certificate on 14-April. Her effective date of registration is 4-April. Having already completed her company Invoice 26 for the week 4-April to 10-April and been paid for it, she must now follow Steps 1 and 2. She will now have a new Invoice for the week 4-April to 10-April which will include VAT . Once we have allocated payments as per Step 3, the only amount on the new invoice unpaid will be the VAT due. She sends this to her agency/client to collect the final payment of VAT outstanding. When she completes her next invoice for 11-April to 17-April her No Worries account has now been updated with her VAT details and so the invoice will automatically include VAT.
(6) Flat rate scheme
If you have requested to be registered under the flat rate scheme, you will shortly be receiving a letter from the HMRC – FRS Acceptance letter.
This letter states that you have been authorised to use the scheme, and the effective date for this.
Please forward a copy to No Worries.
(7) Company bank statements
In completing VAT returns for our customers we will require a copy of banking transactions for each quarter to complete the banking reconciliation. Please either set up bank feeds (Setting up your bank feed via Salt Edge – No Worries Help Centre (no-worries.co.uk)) or email your account manager copies of your bank statements, or downloads of the transactions.
(8) Record keeping
Being VAT registered means you need to keep accurate records regarding all VAT collected (on your invoices) and all VAT paid (expenses and purchases).
You must keep all your business records for at least 6 years.
Record keeping for sales
Whenever you supply standard-rated goods or services you must supply a document showing certain information about what you are supplying. This document is called a VAT invoice. Once set-up, No Worries invoices contain all the required VAT information. You must be sure you keep all invoices sequentially numbered – in the event of an audit you will be queried should there be a gap in the invoice numbering.
Record keeping for purchases
Your supplier’s VAT invoices will give you all the details you need for VAT purposes. Enter these amounts with your No Worries online account under ‘my expenses’ to ensure we capture these as part of your quarterly VAT return. You can only claim VAT on expenses where you have a receipt showing the VAT charged.
(9) Continuing as a VAT registered business
Once we have the information supplied in Step 2 above, and have updated your No Worries online account, all future invoices will automatically have VAT added.
NOTE: If you need to recharge any business expenses back to your client, include the net amount (excluding VAT) in your invoice. The normal VAT rate will then be applied to this amount.