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Andrew Needham of VAT Specialists Ltd explains why online VAT registration may not always be as fast and efficient as expected.

Introduction

The VATman has happily encouraged businesses to use his on-line VAT registration services as it is, according to him, faster and more efficient. In reality the main saving is only the time it takes to post the form to him. 

The Truth Behind On-Line Registration

Under the original on-line application process a number of automatic checks were carried out that speeded up the processing. But when they introduced the new paper form a couple of years ago they had to change the on-line system as it was not compatible with the new paper form and these checks are no-longer undertaken. The VATman simply prints the form off and puts it in the pile with all the paper applications for manual processing.

Like a lot the Government's on-line services, all is not what it seems and the perceived advantages do not really exist. The recent experiences of one of our subscribers highlighted an unbelievable flaw in the system. 

Example

Our client wanted to register his new business for VAT and decided to try the on-line registration service as it was supposed to be quicker than completing the paper VAT 1. The VATman says that over 70% of registration applications are completed within their 13 day deadline so he confidently expected to get his VAT number within two weeks.

One point that the VATman failed to point out was that as he was registering a limited company they needed a copy of the Certificate of Incorporation before they can complete the VAT registration.  But you cannot scan documents and submit them with the form. So the VATman prints off the on-line form that you have completed and puts it in the pile with all the paper application and when he gets round to processing it he sees that he needs a copy of your Certificate of Incorporation and writes to you asking for it. In our subscriber's case the letter was not even sent out until day 15 (2 days after the target for completing the application) and three weeks after applying for VAT registration he had still not been issued with a VAT number.

To add insult to injury, the VATman's website states that to register a partnership you need to complete a VAT 2, which you can’t do on-line.

Tip

The only advantage in applying on-line is, therefore, for sole proprietor businesses. In the case of partnerships the application cannot be completed on-line and for limited companies it is quicker to make a paper application and enclose the Certificate of Incorporation so that the VATman won’t need to ask for it later and slow down the whole registration process.

To download the VAT 1 registration form go to: VAT1 - Value Added Tax - Application for Registration