VAT online software for startups & new VAT registrations: Get compliant from day one

What happens after you register for VAT online

After you apply, HMRC sends you by post:

• your 9-digit VAT registration number, which must go on every invoice you raise
• how to set up your business tax account, if you do not have one, to use the VAT online service
• when your first VAT return and payment are due
• your effective date of registration

HMRC also signs your business up to Making Tax Digital for VAT, unless it is exempt. You must sign up for a VAT online account as soon as your VAT number arrives. If you are still waiting, you can check when to expect a reply from HMRC.

Your effective date of registration

You must account for VAT on your sales from your effective date of registration, and you can reclaim VAT on business costs from that date. HMRC sets it from when your turnover went over the threshold, or from the date you asked if you registered voluntarily, and it is often before your VAT number arrives.

You must register within 30 days of the end of the month your taxable turnover over the last 12 months went over £90,000, or by the end of a 30-day period in which you expect your turnover to go over £90,000 on its own. See the right time to register for VAT.

Invoicing while you wait for your VAT number

You cannot show VAT on your invoices until you have your VAT number. But you still owe VAT on sales from your effective date, so:

1. Raise your prices by the VAT you will owe, usually 20%, and tell your customers why.
2. Reissue those invoices once your number arrives, showing the VAT separately. Your customer pays nothing extra, but a VAT-registered customer can then reclaim the VAT.
3. Keep records of every sale and purchase from your effective date, ready for your first return.

Reclaiming VAT on costs from before you registered

On your first VAT return you can usually reclaim VAT on:

• Goods bought up to 4 years before your effective date, if you still have them or used them to make goods you still have
• Services bought up to 6 months before your effective date

You need a VAT invoice for each item, and the goods or services must be for your VAT-registered business. See our guide to pre-registration expenses.

Making Tax Digital from day one

Every VAT return must go through software compatible with Making Tax Digital. You must:

• keep digital records of your sales and purchases and the VAT on them. A spreadsheet counts.
• keep a digital link between your records and your return, with no retyping
• file through software on HMRC's software finder

Choosing software when you are just starting

Whichever you choose, set it up before your first VAT period ends, so you are not learning it on deadline day. For a fuller comparison, see bridging software vs accounting software.

Your first VAT return

Your first return often covers more than 3 months, running from your effective date to the end of your first VAT period. It is due, with any VAT you owe, 1 calendar month and 7 days after the period ends. Include any VAT you can reclaim on costs from before you registered.

For a step-by-step guide and a due date calculator, see your first VAT return after registration.

Common mistakes new VAT registrations make

• Not charging VAT from the effective date because the number has not arrived yet
• Forgetting the VAT online account, so you cannot see your periods or file
• Missing pre-registration reclaims on equipment and stock
• Choosing software on deadline day, leaving no time to fix a rejected return
• Filing the first return late: each late return earns a penalty point

How Swift VAT Pro helps new VAT registrations

1. Connect to HMRC once your VAT number arrives, with your Government Gateway sign-in. Your first VAT period and due date appear straight away.
2. Keep your records in a spreadsheet, and download our sample CSV to lay out your nine box totals.
3. Upload and check: Box 3 and Box 5 are worked out for you, and every box is checked against HMRC's rules.
4. Get reminded by email 4 days and again 3 days before each due date.
5. Submit and keep HMRC's receipt reference for every return.

Plans start at £5 a month for one business, with one submission every 30 days included, which covers a quarterly return. Every plan has a 7-day free trial with no card needed. See the pricing page.

Final thoughts

Treat your effective date of registration as day one: charge VAT from it, keep digital records from it, and claim what you can from before it. Set up your VAT online account and your software early, and your first return becomes routine rather than a rush.

Disclaimer: This guide gives general information, not advice for your business. If you are unsure how the rules apply to you, speak to an accountant or contact HMRC.