The Basic Difference Between VAT Registration and VAT Return


There is a huge difference between VAT registration and VAT returns in the UK. If you do not have the required understanding of the same, then you have certainly landed on the right page. We are here to help you with all the differences between the two. If you still find any difficulty, then you can connect with accounting services London experts.

It is important for you to get clarity so that you can move ahead without any hassle. So, let’s get started and understand all about VAT Registration first and then proceed ahead with VAT returns.

The Basic Difference Between VAT Registration And VAT Return

What is VAT Registration?

When it comes to VAT registration, it is basically a process that gets your business listed with the government. This shows that your business is active in terms of sales and production. As and when your business is registered, it helps them get the refund of any kind of VAT that was compensated on behalf of their company for any kind of purchases. Not only this, but they also become accountable for:

  • Adding VAT on all the services and goods sold by them.
  • Compensating any VAT because of the HMRC.
  • Filling for VAT returns.
  • Having all the records related to VAT transactions and accounts.

The ones who are registered with the VAT will get a unique VRN number, and it needs to be added to all the business invoices. Hopefully, you got complete clarity about what VAT registration is and how businesses need to use the same. But, there are pros and cons related to it as well. Let’s dig in and take a look at it.

VAT Registration: Advantages

Below mentioned are a few of the pros of VAT registration, take a look:

  • With the help of VAT registration, you are going to be benefited from the refund VAT amount for purchased goods and services.
  • If your company reaches £85,000 turnover after getting the VAT registration done, it can help you save a lot of effort and time in terms of getting the prices adjusted with the VAT rates included.

These are a few of the advantages of VAT registration that you need to keep in mind. But, there are a few disadvantages as well. We have discussed the same in the next segment. Take a look

VAT Registration: Disadvantages

Now let’s take a look at the disadvantages that you might have to face with VAT registration done:

  • The first con of this process is that your product and services get a bit expensive with the addition of VAT amount. This can certainly make you lose the customer base.
  • As and when you get VAT registration done, you need to start with VAT returns filing to keep track of all the VAT receipts and invoices. It is important that you maintain all the VAT accounting records.

These are the disadvantages of the VAT registration process. Hopefully, you got complete clarity about what VAT registration is and how things go by in the respective process. Now let’s understand all about VAT returns to understand the difference between the same.

What Is VAT Return?

When it comes to VAT Return, it is actually the calculation done to check the VAT amount that the company needs to get reimbursed or pay to HMRC. If you are thinking about the process that is followed to calculate VAT returns, then below mentioned factors can certainly help. Take a look:

  1. The total purchases and sales are made within three months of the accounting period.
  2. The VAT amount that you owe in terms of sales.
  3. The VAT amount that you reclaim for all the purchases you have made.

It is important for all the VAT registered companies to file the VAT returns and then submit them as per the given instructions. In fact, even if you do not have anything to pay or claim in terms of VAT amount, you need to file VAT returns regularly. But, the ones who are not registered with the VAT do not have to file for VAT returns.

Hopefully, you got an idea about what VAT returns are and how it is different from VAT registration. But, it is important that you understand the process to submit the same as well. We have covered the same in the next segment.

VAT Return: How To Submit

It is important that you file for VAT returns using authorized Making Tax Digital Software that has been approved by HMRC. It is mandatory for businesses to get their VAT registration done if their turnover is more than £85,000. When it comes to VAT Return, the due date of the same is the first month of the calendar and seven days after the accounting period is completed.

Last Words

Hopefully, you are clear about the difference between VAT registration and VAT returns. If you have any more queries related to it, then you can consider connecting with the experts at accounting services London company and get all the assistance you need. Good luck!


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