Verifying a VAT number before reclaiming VAT can protect your business from rejected claims, repayments, and unnecessary penalties.

The online service for checking a UK VAT number is available at www.gov.uk/check-uk-vat-number. This online tool allows businesses and individuals to verify the legitimacy of a UK VAT registration number, helping to ensure that the information provided by suppliers or customers is accurate and up to date.

By using the online service, users can confirm whether a VAT number is valid and view the registered business’s name and address, providing reassurance when entering into new commercial relationships.

In addition to basic verification, the service enables UK taxpayers to download an official certificate confirming that a VAT number was valid at a specific date and time. This certificate can be retained for audit records, offering valuable evidence in the event of future HMRC queries. Having accurate documentation is especially important when dealing with unfamiliar or newly established suppliers, where the risk of error or deliberate fraud can be higher.

Checking a VAT number can help avoid costly mistakes. If a VAT number is invalid and you have reclaimed input VAT on related purchases, HMRC may refuse the claim and can also seek repayment of VAT, potentially resulting in financial penalties.

For eligible businesses, the VAT Annual Accounting Scheme can reduce paperwork, smooth cash flow and replace quarterly returns with a single annual submission.

The VAT Annual Accounting Scheme is open to most businesses with a taxable turnover of up to £1.35 million per year. Businesses using the scheme are required to submit one VAT return per year, rather than quarterly returns. This can significantly reduce the administrative time and cost associated with preparing and filing your VAT returns.

The scheme also allows businesses to make regular interim payments throughout the year, which can help with cash flow management. Interim VAT payments are made during the year based on the business’s estimated total VAT liability for the accounting period.

Interim payments can be made either monthly or quarterly and are followed by a final balancing payment submitted with the annual VAT return. The regular payments are usually based on the previous year’s VAT liability, which means they may be higher than necessary if turnover has fallen.

Where payments are made monthly, they are typically calculated as 10% of the estimated annual VAT bill and are due at the end of months 4 through 12 of the VAT accounting period. Where payments are made quarterly, they are usually calculated as 25% of the estimated VAT liability and are due at the end of months 4, 7 and 10.

The final balancing payment for the annual VAT return is due within two months of the end of the standard 12-month VAT accounting period. If VAT has been overpaid based on the estimated amounts, HMRC will refund the difference. Payments must be made electronically.

VAT road fuel scale charges are fixed, standardised amounts that businesses must use to account for output VAT when they provide fuel for private use in a vehicle that is also used for business purposes.

The VAT road fuel scale charges are published annually with the current figures applying from 1 May 2025 to 30 April 2026. The fuel scale rates are designed to encourage the use of cars with low CO2 emissions.

A business can use the VAT fuel scale charges to work how much VAT they need to pay back when a business car is used for private journeys. This approach removes the need to keep detailed mileage records. In practice, businesses should reclaim all the VAT on the fuel for the car, then use the fuel scale charge tool to work out the correct charge for the period. Once calculated, this amount needs to be included in the VAT owed on the VAT Return.

Where the CO2 emission figure is not a multiple of five, the figure is rounded down to the next multiple of five to determine the level of the charge. For a bi-fuel vehicle which has two CO2 emissions figures, the lower of the two figures should be used. There are special rules for cars which are too old to have a CO2 emissions figure.

Many businesses are still unaware that the VAT late filing and late payment rules now operate on a points-based system, where repeated delays can quickly lead to a £200 penalty and added interest.

The VAT late filing penalties regime changed for accounting periods beginning on or after 1 January 2023. Under the new system, there are penalty points for late filing of VAT returns and for the late payment of VAT liabilities.

The revised system operates on a points-based approach. A taxpayer receives one penalty point for each VAT return that is submitted late. Once a specific threshold of points is reached, a financial penalty of £200 is charged and the taxpayer is notified.

The penalty thresholds based on VAT return frequency are as follows:

• For monthly VAT returns, the threshold is five penalty points
• For quarterly VAT returns, the threshold is four penalty points
• For annual VAT returns, the threshold is two penalty points

For example, a business that files VAT returns on a quarterly basis will receive a £200 penalty once it accumulates four late submission points. To remove the penalty points and return to a clean compliance record, the taxpayer must submit all VAT returns on time for a continuous period of twelve months. There are also statutory time limits after which a penalty point cannot be issued for a particular late return.

Late payment penalties are applied separately. If VAT remains unpaid between 16 and 30 days after the due date, a first penalty of 2% of the outstanding tax is charged. If the VAT is still unpaid 31 days or more after the due date, a second penalty of 4% of the outstanding amount applies.

In addition, late payment interest is charged from the day payment becomes overdue until it is paid in full.

If your business has relatively low VATable expenses, the VAT Flat Rate Scheme can simplify your VAT reporting and may also improve cash flow.

The VAT Flat Rate Scheme is designed to simplify VAT accounting for small businesses. Instead of calculating VAT on each sale and purchase, businesses pay a fixed percentage of their total turnover, including VAT. This percentage varies depending on the type of business activity and is set by HMRC.

The scheme reduces the complexity of VAT compliance by eliminating the need for detailed calculations and record-keeping of input VAT on purchases.

To be eligible for the scheme, a business must expect its annual taxable turnover (excluding VAT) to be no more than £150,000 in the next 12 months.

The advantages of the VAT Flat Rate Scheme include:

• Simplified VAT Administration. Businesses don't need to calculate VAT on each sale or claim VAT on most purchases, reducing time and effort involved in VAT reporting.
• Predictability of VAT Payments. The fixed flat rate percentage makes it easier to predict and budget for VAT payments, improving cash flow management.
• Potential Financial Savings. If your business has minimal expenses that are subject to VAT, you may pay less VAT overall compared to the standard VAT method.
• Ideal for Service-Based Businesses. Businesses with minimal goods purchases, such as consultants, IT professionals and freelancers, often benefit the most. This is especially true if they are not classified as limited cost traders.
• 1% First-Year Discount. This temporary discount provides a cash flow boost, which can be especially useful for new or growing businesses. It only applies in the first year of VAT registration.

While the scheme can greatly simplify VAT reporting and reduce administrative burdens, businesses should regularly assess its suitability, as it may not always remain advantageous as a company expands or its circumstances change.