Enter VAT registration settings

This article explains how to enter or update your business's VAT settings in FreeAgent. You may have entered some of this information when you set up your FreeAgent account.

Please note:

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Navigating to your VAT Registration settings

Select 'Settings' from the drop-down menu in the top-right corner and then select 'VAT Registration'.

VAT Registration highlighted on settings page

Selecting a VAT registration option

By default, all new businesses in FreeAgent are set up as 'Not Registered'. The steps to follow depend on whether your business is not registered for VAT, has applied for VAT registration or is VAT registered.

If your business is not registered for VAT

If your business isn't registered for VAT and you're not currently waiting to hear the outcome of an application to register, leave the VAT status as 'Not Registered'.

Not Registered selected as the VAT registration status

If you've applied for VAT registration

If you've applied for VAT registration for your business, select 'Registration Applied For' from the drop-down menu. Enter the date you expect to be registered from and select 'Save Changes' at the bottom of the screen to complete the process.

FreeAgent will start adding VAT to the price of items on any new invoices that you create with dates on or after that date. This is to ensure that customers pay you the full amount.

Registration applied for set as the VAT registration status

When your VAT registration number arrives, you'll need to return to the VAT Registration page in FreeAgent and complete the following steps:

  • Change your registration status to 'Registered'.
  • Provide the additional information required, including the correct VAT registration effective date.
  • Review any invoices that you issued to your customers while you waited for your VAT registration to come through, and then edit and re-issue those invoices. Doing this will give your customers valid VAT invoices that they can use to claim back the VAT you have charged them. If you wish, you can send these invoices via email in FreeAgent and include a note to explain to customers that the second invoice is for their records and that they don't need to pay the same invoice twice.
  • Remember to review all active recurring invoice profiles, so that the correct rate of VAT will be applied to future recurring invoices.

If your business is already VAT-registered

If your business is already registered for VAT or becomes registered, select 'Registered' from the drop-down menu and enter the additional details.

VAT registration settings set as Registered

Providing your VAT registration details

When you choose the 'Registered' option from the VAT status drop-down menu, you'll be asked to provide some additional information about your VAT registration.

First of all, enter your VAT registration number. This is a compulsory field because your VAT registration number must be printed on your invoices.

Using the same VAT number?

If the new business is taking over the same VAT number, the new ‘Effective Date of VAT Registration’ will also be the new ‘Company Start Date’ which is found under Accounting Dates in your Settings.

VAT registration number field highlighted

Next, enter the date your business's VAT registration became effective. This will enable FreeAgent to use the correct dates for any pre-registration bills you incurred during the period between setting your business up in FreeAgent and your VAT registration effective date.

Enter the date that your first VAT return period ended. This is the date you prepared your business's very first VAT return to, not the date you're preparing your first VAT return in FreeAgent to (although these dates may be the same). FreeAgent will automatically date your next VAT return to finish three months after the date you enter here.

VAT registration dates highlighted

Select the relevant VAT accounting basis from the drop-down menu. If you're cash accounting for VAT or using the cash basis on the VAT Flat Rate Scheme, select 'Cash' from the drop-down menu. If you're invoice accounting for VAT or using the standard method of the flat rate scheme, select 'Invoice' from the drop-down menu.

VAT accouting basis drop-down menu highlighted

If your business is using the VAT Flat Rate Scheme, select 'Yes' next to 'Are you on the Flat Rate Scheme?'.  If your business is not accounting for VAT using the Flat Rate Scheme, select 'No' instead. You will know if your business is using the Flat Rate Scheme because you have to apply to HMRC to join this scheme and be accepted before you can use it. This is different from registering for VAT or registering to use the VAT online filing service. Please note that you can edit this information on individual VAT returns if your VAT scheme changes or you stop using the Flat Rate Scheme

If your business is accounting for VAT using the Flat Rate Scheme, select the relevant sector from the drop-down menu. If your business buys only a few goods and you qualify as a limited cost trader, be sure to choose this option from the menu.

VAT Flat Rate Scheme details

Pre-registration purchase period

You can change how far back you would like to look back for your pre-registration purchases.

Pre-registration expenses option highlighted

When you're happy with all the information you've entered, select 'Save Changes' at the bottom of the screen to complete the process.

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