Difficulty with not being VAT registered

[meerkat11]

My husband and I set up a business to develop laboratory instruments last year. We set up this company with our savings and used that to finance us through the last year as we developed our product. Because we did not have sales, we could not get a VAT number. I tried to register for it in the HMRC website, but my application was rejected because we did not have any invoices to present.

Meanwhile, we have come to a point where we need to order some specialty chemicals, which are only available through a large conglomerate (Merck ). It has basically been impossible to get an account with them, which is needed to order these chemicals. These are not particularly dangerous or contentious chemicals, just material which is laboratory grade.

Merck have refused to open an account for us because we dont have a history with them, but at a minimum need a VAT number before they will even consider opening an account for us.

So how do I get a VAT number without any sales or invoices? I have purchased a lot of small components and paid the VAT for them as it was just expedient at that point.

Any advice would be very welcome.
thanks

 

[japancool]

I don't recall having to present invoices in order to register for VAT. I've started companies up and registered for VAT right from the start, before trading.

Are you sure that's why they rejected your application?

 

[KM-Tiger]

I don't recall having to present invoices in order to register for VAT

As I recall you need to demonstrate an 'intention to trade' which could be invoices or could be other documentation.

It's too long ago to remember exactly what I did, but I got the VAT registration without invoices as evidence.

 

[UK Contractor Accountant]

VATREG21550 - Voluntary registration: intending traders: what is an intending trader?
An intending trader is a person who, on the date of the registration request:

• is carrying on a business
• has not started making taxable supplies
• has an intention to make taxable supplies in the future.

Intending traders normally seek registration from a current date in order to reclaim input tax incurred in the setting up and development of their business. In some cases, the amounts involved may be substantial and cover a long period of time.

This section explains the criteria that must be satisfied before a trader may be accepted as an intending trader, and sets out the procedures for processing an intending trader application.

VATREG21250 - Voluntary registration: making taxable supplies below the threshold: is there a business?
A person who makes any taxable supply by way of business, irrespective of value, is entitled to register for VAT. Although there is no definition in VAT legislation, some guidelines on what constitutes a business have been established from Court and Tribunal decisions. In addition, a person undertaking preparatory activities for the setting up of a business is considered to be in business for these purposes

 

[UK Contractor Accountant]

A number of applications under the “intending trader” category are being rejected automatically by HMRC due to the prospect of short-term turnover being affected by coronavirus.

If this happens appeal against the rejection by sending an email to [email protected] with additional evidence of the intent.

 

[DontAsk]

I registered this year and did not need to provide any evidence, e.g. invoices. All I gave were the business details.

What I can't get them to do is update the address, after a move.

 

[The Byre]

So how do I get a VAT number without any sales or invoices?

You write a business plan and hand this with any other documentation to your accountant and they will make the application for you.

 

[Paul Norman]

I have found that getting my accountant to do VAT registration reduced the hassle by about 5 million percent.

 

[DontAsk]

I sometimes think I must live on a different planet! VAT registration was a no brainer earlier this year. You don't have to prove anything, apart from the company details.

OP: DO you actually have a registered company, or are you just a sole trader?

 

[meerkat11]

I sometimes think I must live on a different planet! VAT registration was a no brainer earlier this year. You don't have to prove anything, apart from the company details.

OP: DO you actually have a registered company, or are you just a sole trader?

I have a registered company. I guess i need to show some numbers in the intended sales question for them to register me for VAT. that is what I am going to try

 

[MyAccountantOnline]

My husband and I set up a business to develop laboratory instruments last year. We set up this company with our savings and used that to finance us through the last year as we developed our product. Because we did not have sales, we could not get a VAT number. I tried to register for it in the HMRC website, but my application was rejected because we did not have any invoices to present.

...

HMRC have said that if zero is shown as turnover for the next 12 months applications can be automatically rejected.

Did you submit an appeal to the VAT registration team?

 

[MyAccountantOnline]

VAT registration and intending traders – HMRC update | The Association of Taxation Technicians (att.org.uk)

 

[DontAsk]

HMRC have said that if zero is shown as turnover for the next 12 months applications can be automatically rejected.

Why would you register for VAT if you have no turnover?

The VAT paid on supplies can be claimed up to 4 years (less for services).

 

[MyAccountantOnline]

Why would you register for VAT if you have no turnover?

The VAT paid on supplies can be claimed up to 4 years (less for services).

The OP explained that they need a VAT registration number as a minimum requirement for a trade account.

It's also going to aid cashflow being VAT registered and it will potentially enable them to claim input VAT on all business expenses.

 

[Bobbo]

Why would you register for VAT if you have no turnover?

The VAT paid on supplies can be claimed up to 4 years (less for services).

As well as the cash flow point made by MyAccountantOnline, the VAT can only be claimed later on if the goods are still held. If they've been used up prototypes or whatever then there are no goods on hand to claim back VAT on at registration.

 

[JEREMY HAWKE]

Well I recall some participants on here finding registration easy and then regretting their registration for what ever reasons .
Maybe there should be a stress test

 

[meerkat11]

Thanks for everyone who chimed in. I put a projected revenue figure in my application and my VAT no application has come through and I was able to use it to order some chemicals we needed from the supplier

 

[Paul Kelly ICHYB]

So how do I get a VAT number without any sales or invoices?

you go to HMRC and apply....

 

[Deleted member 59730]

As well as the cash flow point made by MyAccountantOnline, the VAT can only be claimed later on if the goods are still held. If they've been used up prototypes or whatever then there are no goods on hand to claim back VAT on at registration.

Really. You surprise me. What about creating intangible IP?

 

[Bobbo]

Really. You surprise me. What about creating intangible IP?

I was paraphrasing section 11.2 of VAT Notice 700. It says goods must be still held or have been used to make other goods which are still held. No mention of goods used in the creation of intellectual property.

 

[Deleted member 59730]

which are only available through a large conglomerate (Merck ).

Merck once had an account with me. I can't think that I asked for their VAT details.

 

[Elliot Green]

I don't recall having to present invoices in order to register for VAT. I've started companies up and registered for VAT right from the start, before trading.

Are you sure that's why they rejected your application?

Sometimes HMRC does not make it easy to register the VAT application if you do not reach the threshold. I assume this is to stop VAT fraud issues arising from people who reclaim input VAT wrongfully such as in cases of missing trader fraud.