The way businesses register for VAT changed on 1 August 2022. A new VAT Registration Service (VRS) has been created to manage the process. 

One of the key features of the new VRS is that every business will be automatically signed up to Making Tax Digital (MTD) VAT as part of registration. This removes the need for businesses to take that extra step.   

To complete a VAT registration, you will need your:

• name 

• date of birth 

• National Insurance number 

• ID, such as your passport or driving licence 

• details of turnover and nature of business 

• bank account details (or a reason if no bank account details are provided) 

• Unique Tax Reference (UTR) number 

If you are registering a limited company, they must have a Company Registration Number and a Corporation Tax Unique Taxpayer Reference (UTR) to complete the VAT registration process. Individuals and Partnerships do not need to have a Self-assessment UTR to register for VAT, but if they do have one, they must supply it. 

HMRC recommend that you have this information to hand when starting an application. If you are waiting for information to register you can save and edit the application for 7 days by clicking ‘Save and Exit’. This will soon be increased to 28 days. 

The tax reductions set out in the Kwarteng/Truss mini-budget of 22 September 2022 have been scrapped, apart from the cancellation of the NIC increase for 2022-23, the withdrawal of the Healthcare Levy from April 2023, the changes to Stamp Duty Land Tax and the increase in the Annual Investment Allowance.

As we are presented with yet another new face at 10 Downing Street, the cabinet has delayed its fiscal statement until 17 November. We will be reporting on these developments in the next newsletter.

Hopefully, the new government will be mindful that recent changes in political circles have had a disastrous impact on small businesses across the UK. Double digit inflation and higher interest rates are compounding external pressures and making life difficult across multiple business sectors.

A rising number of businesses are failing as the Government’s pandemic support is withdrawn and banks push their credit score limits higher making it harder to borrow.

The Office for National Statistics has reported that there were 5,600 registered company insolvencies from April to June this year, a 13 per cent increase from the first quarter of 2022.

But what is more disturbing is that it represents an 81 per cent increase from the same period last year.

Help has disappeared

When COVID-19 appeared on the scene, many businesses applied successfully for Government support to help them through that difficult period. But that help is no longer there and for many businesses, it is exposing cracks that had been papered over.

At the same time Experian has noted a nine per cent drop in credit scores across SMEs, making the challenge of borrowing money to sustain a business even more difficult.

With banks increasing the credit score threshold for borrowing money, businesses have nowhere to turn to find the financing to keep them afloat.

The current political situation with controversial mini-Budgets, U-turns and PM resignations is adding to the problem as risk-averse banks hold back from lending until the economic outlook becomes more stable.

What you can do

The question is, what steps can a business owner take to try to avoid their company becoming another statistic?

• Look for efficiencies within your business. No matter how small they may seem, it will all add up.
• Take a good look at your finances. Analyse where the money is going and work out if it is all necessary expenditure.
• Keep a good cashflow. Have you got outstanding debtors? Chase the money in.
• Loyalty is a fine attribute, but if your regular supplier can’t match the quote of a competitor, you need to put your business needs first.
• Talk to us. We are here to advise and may be able to see something that you have overlooked.
• Don’t give up. Nothing lasts for ever. Batten down the hatches and wait for the storm to pass.