What to do about a delayed UK VAT number

What to do about a delayed UK VAT number

What to do about a delayed VAT number.  What should you do if you need a VAT registration but you can’t get one? How can you issue invoices while you’re waiting for a UK VAT number?

This has been a common problem ever since Brexit as HMRC continue to have significant delays in processing VAT registrations – see this from the CIOT.  To make matters worse HMRC have closed their registration helpline so you can’t even speak to them now about when your number might come through.

So what to do if you need to issue an invoice but HMRC has delayed issuing you a VAT number? You know you need one but just can’t get one?

Clearly life and business needs to go on and, unfortunately, the only way that can happen will involve a degree of double tracking.  you need to be very careful here as issuing an invoice while you are not registered is a grave matter liable to significant penalties.  A first step is that you need to be sure an application has been made on a correct footing and from the correct date.

That done and you know you are going to be registered from a particular date but yet VAT law does not allow you to charge or show VAT on your invoices until you actually get your VAT number.  Nevertheless you need to trade and HMRC will expect you to pay VAT on the supplies made in the meantime.  You’re going feel caught between the devil and the deep blue sea.

The only thing you can do is adjust prices to allow for the eventual VAT amount payable on the supply and tell customers that you can’t give them a VAT invoice until the VAT number has been confirmed.  In the past this only involved an overlap of a week or two but for too long now the wait can easily be over several months.  All very annoying as customers could well be unhappy about paying an amount that will become VAT but yet they can’t claim the payment as their own VAT until they get an invoice.

Here’s how to sort it out:

What you need to do about a delayed UK VAT number is to send an email to the customer explaining the problem.  You could even use our suggested draft as below or edit this to suit your house style:

Suggested draft re to add to invoices:

‘Unfortunately we have no choice but to register for VAT and our application is currently being processed by HMRC.  VAT will fall due on this and all future invoices and has been included in the total which you must pay against this invoice.  We apologise that we cannot show VAT as a separate amount until our VAT number has been allocated.  Please let me know if you would like a replacement invoice to be issued to you showing the VAT as a separate total once our VAT number has been allocated.’

If your customer is VAT registered and might be looking to reclaim VAT on your invoice then you could also add:

‘HMRC will not allow claims for input VAT against this invoice so you will need to postpone any claim until we are allowed to issue a proper VAT invoice.’

Once your VAT number has been confirmed then you can raise an invoice showing the amount as VAT but not a minute before then.  It really is very important to not add an amount to an invoice and call it VAT because that’s fraud and you certainly don’t want to make a bad situation worse.

As ever, please get in touch if there is anything we can do to help.

Posted in VAT Appeals.