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How to Check if a Company is VAT Registered

How to Check if a Company is VAT Registered

Value Added Tax (VAT) is a consumption tax that is charged on most goods and services sold within the UK. It is collected by HM Revenue & Customs (HMRC).

Businesses with annual taxable turnover above a certain threshold must register for VAT in the UK. The current VAT registration threshold is £85,000 per year.

Once registered, businesses must charge VAT on their sales invoices and pay this VAT to HMRC. They can reclaim VAT paid on business purchases.

There are various reasons why you may need to check whether a business is VAT-registered or not:

  • If you are buying from a business, you need to know if VAT should be charged.
  • If you are selling to a business customer, you need to determine whether to charge VAT on sales.
  • When carrying out due diligence on new suppliers or customers.
  • To determine the size and turnover of businesses you interact with.

This article will explain several methods for checking if a company is registered for VAT in the UK.

What is a VAT number?

A VAT registration number, often called a VAT number, is a unique reference number allocated to a business when it register for VAT.

It is the main way to identify VAT-registered companies. VAT numbers follow a standard format:

  • UK VAT numbers begin with GB followed by 9 digits, for example GB123456780
  • EU VAT numbers start with the 2-letter country code, then up to 12 digits, for example: DE123456789

VAT-registered businesses must display their VAT number on sales invoices and websites.

Check the company’s website

The easiest way to initially check if a company is VAT registered is to look on their website.

Go to the website of the business you are interested in and check the following areas:

  • Footer – Many companies display their VAT number in the footer or bottom section of their website.
  • About Us/Legal Information – VAT details are often listed under ‘About’ or legal information pages.
  • Contact Us – Some businesses include VAT numbers on their contact page.
  • Invoices/Quotes – If sample invoices or quotes are published, check these for a VAT number.

If the VAT number is displayed, you can assume the company is registered for VAT. However, not showing a number doesn’t confirm they are not registered. So this method should not be solely relied upon.

Use the HMRC VAT Number Checker

HMRC provides an official VAT number-checking tool on the GOV.UK website. This directly accesses HMRC’s VAT registration data.

To use it to validate a UK VAT number:

  1. Go to https://www.gov.uk/check-uk-vat-number
  2. Click ‘Start now’ and enter the VAT number to be checked.
  3. Select the date you want to check the VAT status.
  4. Choose if you want to generate a PDF receipt of the check.
  5. Click ‘Check number’.

It will then confirm if the number is valid and registered on the date entered. This is the most accurate way to check a UK VAT number.

Search on the VAT Information Exchange System

Search on the VAT Information Exchange System

The VAT Information Exchange System (VIES) is an EU-wide online database for checking the validity of VAT numbers.

To verify a UK VAT number using VIES:

  1. Go to the VIES website – http://ec.europa.eu/taxation_customs/vies/
  2. Enter the UK VAT number you want to check.
  3. Select the United Kingdom as the country.
  4. Click ‘Validate’.

If valid, it will return the company name and address registered to that VAT number. This confirms they are VAT registered.

If invalid, it will state ‘no matching records found’. Reasons for this could include:

  • The business is not VAT-registered.
  • The VAT number is incorrect.
  • The business trades under a different company name.

VIES only covers EU VAT numbers. It also relies on the data held being up to date. So further checks may be required.

Contact HMRC

You can also check if a business is VAT-registered by contacting HMRC directly.

Call the VAT Helpline on 0300 200 3700 and provide the VAT number you want to validate.

An HMRC adviser will then search the database and confirm if the number is registered to a business and if the status is active.

This provides definitive confirmation directly from the tax authority. However, it is slower than using the online checker.

Search business information databases

Various commercial databases provide company information, including VAT registration details. Some options:

  • Companies House – Holds statutory information on UK limited companies. You can search for a company and get details like their registered VAT number.
  • Creditsafe – Provides company credit reports with VAT registration status and history. You pay a fee to access full reports.
  • D&B Hoovers – Business intelligence reports on public and private companies globally, covering VAT details. Subscription required.

These can provide useful confirmation of VAT status, but charges may apply for full reports.

Ask the business directly

Contacting the company in question directly is often the quickest way to find out their VAT status.

Call their accounts or sales department. Explain you need to check if they are VAT registered and ask them to provide their VAT number.

Most companies will happily confirm whether they are registered and supply evidence. However, sole traders and smaller firms may be reluctant to disclose this information without an active sales inquiry.

Confirming overseas VAT numbers

When trading internationally, you may need to verify VAT numbers from outside of the UK.

EU countries

For EU trading partners, use the VIES system as explained above. Enter the country code and VAT number to check validity.

Non-EU countries

To validate VAT numbers from non-EU countries:

  • Some countries provide official online VAT number checkers, similar to the UK’s system. Research if the tax authority in that country offers such a tool.
  • Contact the foreign tax authority directly via phone or email. Many will perform checks on request.
  • Engage a local tax agent or VAT specialist in that country to verify the number for you.
  • Ask the overseas business to provide additional proof like their VAT registration certificate.

Checking non-EU VAT numbers tends to be more difficult without access to a central verification system.

When to check VAT numbers

Certain business processes and events will trigger the need to check VAT numbers. Common occasions when VAT number validation is required:

Taking on a new customer

  • Validate their VAT details on signup before supplying to them. Do not rely on the VAT number being provided alone – check it is valid.

Making sales to a new EU country

  • Once your distance sales to another EU country exceed the registration threshold, you must start charging VAT at their rate. Check customers’ VAT numbers at this point.

Processing sales orders

  • Integrate VAT number validation into your sales order processing procedure. This will identify any fraudulent numbers.

Updating supplier records

  • Periodically check that your supplier VAT numbers remain valid and they are still registered.

Financial auditing

  • Include VAT number checks of key customers and suppliers as part of internal audits.

Due diligence on mergers/acquisitions

  • Review the VAT compliance of both entities as part of M&A due diligence processes.

Tax authority reviews

  • If being reviewed by HMRC or overseas tax bodies, they may request evidence that you are verifying VAT numbers appropriately.

Being proactive with VAT checks at key business events reduces risk and ensures you have current information.

Output VAT rates

VAT is usually charged at the standard rate of 20% in the UK. However, different rates apply in certain cases:

  • Zero-rated – 0% VAT is charged on basic food, books, and children’s clothing for example.
  • Reduced rate – A 5% VAT rate applies to some goods like domestic fuel supplies.
  • Exempt – No VAT is charged on services like insurance or healthcare.
  • Imported goods – Import VAT may be payable if buying goods from outside the UK.

Checking a customer’s VAT registration status determines which rate you should apply to sales.

If they are registered, you charge based on the goods or services supplied.

If not registered, you must charge 20% VAT on all sales.

So validating VAT numbers ensures you apply VAT at the correct rate.

Input VAT recovery

Recovering input VAT paid on purchases is a key benefit of VAT registration.

To reclaim input tax, you must hold valid VAT invoices from registered suppliers. This is another reason why checking VAT numbers is important.

Validating supplier VAT details verifies:

  • They are legitimate and registered.
  • Their invoices allow you to recover input tax.
  • You are not paying VAT to fraudulent businesses.

Review input VAT regularly to identify any numbers that require further validation. Input tax recovery claims may be rejected if they are related to invalid VAT numbers.

VAT compliance software

Using dedicated VAT compliance software can streamline the process of checking and validating VAT numbers. Features to look for include:

  • Real-time VAT number validation – Checks customer and supplier numbers against official databases as they are entered into your system.
  • Reporting – Activity reports detailing when VAT numbers were checked and the results. Useful for audit evidence.
  • VIES integration – Auto-syncs with the EU VIES database for live VAT number verification.
  • VAT determination – Calculates the correct VAT rates to charge based on validated VAT numbers.
  • Invoice integration – Adds validated VAT numbers to sales invoices.

Investing in smart software provides efficiency and control over VAT compliance.

VAT registration certificates

Once registered for VAT, businesses are issued with a VAT Registration Certificate by HMRC. This includes:

  • Your unique VAT number
  • Effective registration date
  • Registered business name and address
  • Registration turnover figure
  • VAT accounting periods you will report under

It formally certifies your business as VAT-registered. Display the certificate prominently on your premises as it may be requested by HMRC inspectors.

When checking a supplier or customer’s VAT status, you can ask them to provide a copy of their VAT Registration Certificate as evidence.

Penalties for VAT errors

HMRC treats VAT non-compliance very seriously. Fines and penalties apply for a range of VAT errors:

  • Late VAT registration – Failure to register on time once the VAT threshold is exceeded. Penalties up to 15% of VAT owed.
  • Late VAT filing – Missing VAT return deadlines – fixed fines plus further penalties for ongoing delays.
  • Inaccurate VAT returns – Incorrect or incomplete VAT returns can attract penalties up to 100% of the VAT due.
  • Failing to charge VAT – Omitting VAT that should be charged on sales – fines up to 30% of the VAT due.
  • VAT fraud – Deliberately attempting to avoid VAT – penalties between 30-100% of evaded VAT. Could lead to criminal prosecution.

The seriousness of penalties makes VAT compliance essential. Cross-checking VAT numbers is the first line of defence in preventing non-compliance.

Consider VAT exemptions

If a business does not appear to be VAT registered, it may be covered by a VAT exemption.

Certain business types do not have to register for VAT in the UK. This includes:

  • Financial services e.g. insurance, banking
  • Education providers
  • Healthcare services
  • Charities

So the lack of VAT registration does not always indicate non-compliance. The rules on VAT exemptions are complex, so seek specialist advice if required.

Consequences of not checking VAT status

There can be significant implications for interacting with non-VAT-compliant businesses:

  • Unpaid VAT – If you sell goods or services to a business that turns out to be fraudulent or unregistered, you remain liable for any unpaid VAT. This will come out of your profits.
  • Penalties – HMRC may impose financial penalties if you fail to carry out adequate checks on customers. Penalty fines are typically 15-30% of any VAT underpaid.
  • Loss of customer – VAT-dodging companies identified by HMRC are forced to cease trading. So you lose a customer and risk any money owed.
  • Reputational damage – Your business could suffer negative PR and scrutiny for neglecting VAT compliance processes.

Performing quick VAT number checks helps avoid these substantial risks.

When VAT checks are mandatory

There are certain cases where a legal obligation exists to verify VAT numbers:

  • For EU cross-border sales, VAT rules say both parties must validate each other’s VAT numbers.
  • When making distance sales over the VAT threshold for other EU countries, the customer’s VAT number must be validated.
  • To apply zero-rated VAT between UK VAT-registered businesses, their VAT status must be evidenced.
  • Online marketplaces are responsible for checking the VAT compliance of firms using their platform before selling.

Outside of these situations, verifying VAT numbers is considered best practice whenever trading with new business customers or suppliers.

How to register a business for VAT

If your turnover exceeds the current VAT threshold of £85,000 per year, you must register your business with HMRC for VAT.

The VAT registration process involves:

  • Working out your total VAT taxable turnover to determine if registration is required.
  • Choosing the effective registration date – can be backdated up to 4 months.
  • Applying to HMRC via their website, by post or by phone.
  • Receiving your VAT Registration Certificate and unique VAT number.
  • Setting up VAT accounting procedures and software.

It is advisable to seek expert guidance when registering for VAT, as there are various schemes and reporting options to consider.

Once registered, you will need to charge VAT on sales, file regular VAT Returns and pay VAT to HMRC. There are various penalties for non-compliance so it is essential to maintain accurate VAT records.

Summary

Checking whether a business is VAT-registered is important for both buyers and suppliers when trading with new companies.

The main ways to check are:

  • Search for the VAT number on the company’s website.
  • Validate the VAT number through VIES or HMRC’s VAT number checker.
  • Look up the company on business information databases.
  • Contact HMRC or the business directly.
  • Consider if the company is exempt from VAT registration.

Using a combination of these methods helps mitigate the risks of dealing with non-compliant firms. Dodging VAT checks can lead to substantial fines, unpaid taxes and lost business.

A few quick searches can provide peace of mind that your business is transacting only with legitimate, VAT registered customers and suppliers. This ensures full compliance with VAT regulations.

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