What is a VAT Number?

Every business entity registered for Value Added Tax (VAT) in the UK is assigned a unique identification number known as a VAT number or VAT registration number (VRN).

Issued by HMRC your VAT number is a numerical code which serves as a crucial identifier for tax related purposes and is mandatory for businesses operating within the VAT regime.

A VAT number is a distinctive sequence of characters and is used by HMRC and other tax authorities to identify VAT registered businesses.

Within the European Union (EU), VAT registration numbers follow a standardised structure, commencing with two letters that denote the country of origin, followed by a series of numerical digits.

By understanding the significance of a VAT number, its format, and how to verify it, businesses can navigate the VAT system with more confidence, ensuring VAT compliance and reducing potential legal or financial risks.

The UK VAT number format

For businesses located in England, Scotland, and Wales, the VAT number format consists of the prefix ‘GB’ (an abbreviation for Great Britain) succeeded by nine numerical digits.

An illustrative example of a valid UK VAT identification number would be ‘GB123456789’.

Businesses operating in Northern Ireland and engaging in trade with the EU employ the prefix ‘XI’ instead of ‘GB’.

The VAT number is unconnected to a company’s registration number or an individual’s self assessment unique tax reference number (UTR).

How do I get a VAT Number?

The process of acquiring a VAT number is initiated by registering your business for VAT with HMRC.

Once the registration is complete, you will receive a VAT registration certificate that contains your unique VAT number, the effective date of registration, and the date of your first VAT return.

It’s important to note that VAT registration is mandatory for businesses whose VAT taxable turnover exceed the current VAT registration threshold which sits at £90,000 as of April 2024.

Some businesses may choose to register voluntarily (even if their turnover falls below the threshold) to benefit from certain tax advantages, like the ability to reclaim VAT on eligible business expenses.

VAT numbers and international trade

While this guide primarily focuses on VAT numbers within the UK, it’s important to acknowledge that the format and structure of VAT numbers can vary across different countries.

When engaging in international trade or transactions with businesses operating outside the UK, it’s essential to familiarise yourself with the specific VAT number formats and requirements of the respective countries.

Why is a VAT number essential?

A VAT number serves as a vital identifier for businesses, playing a pivotal role in various tax related scenarios.

Here are some key reasons why possessing a VAT number is crucial:

VAT returns and compliance

If your business is registered for VAT, you are obligated to report and remit VAT to Her Majesty’s Revenue and Customs at regular intervals (usually quarterly) throughout the tax year.

This process can be facilitated either manually through HMRC’s online portal or by leveraging authorised making tax digital software solutions.

During the submission of VAT returns providing your accurate VAT identification number is essential.

This enables HMRC to verify your reporting periods and ensure compliance with VAT obligations.

VAT invoicing and transactions

When issuing invoices to VAT registered customers or receiving invoices from VAT registered suppliers, it is a legal requirement to display the respective VAT identification numbers on these documents.

This practice not only ensures transparency but also aids in the accurate calculation and reporting of VAT.

VAT and cross border trade within the EU

For businesses engaged in cross border trade within the European Union, possessing a valid VAT number is an absolute necessity.

This number serves as a means of identification and facilitates the smooth flow of goods and services across EU member states while adhering to the respective VAT regulations.

Verifying the validity of a VAT number

Ensuring the accuracy of VAT numbers is crucial to avoid potential complications and penalties.

Fortunately, HMRC provides an online VAT identification number validation service that allows you to quickly verify the legitimacy of a VAT number.

The check a UK VAT number online service provides a reference number for your search results which you can retain as evidence, demonstrating whether the UK VAT numbers you’ve checked are valid or invalid.

This documentation proves valuable if tax discrepancies arise with the relevant company or business in the future.

This service is particularly beneficial when dealing with new clients or suppliers who have provided their VAT numbers.

By cross checking the validity of the number, you can mitigate the risk of inadvertently engaging with entities that may be attempting to evade VAT or engaging in fraudulent activities.