When you want to know more about a company or a business, you generally surf through the internet and see the reviews to check if the company is authentic or not. But it is not always enough.
What if your new customer or supplier turns out to be a fraud? Well, you can check if it is a legitimate company or not by its VAT registration. It is important to note that a company needs to register for VAT only if its taxable turnover is more than £85,000.
How to Check if a Company Is Vat Registered in the UK?
Let us first know what precisely a VAT Number is.
The full form of VAT is Value Added Tax. A VAT Number is also often known as VAT Registration Number, a unique number issued by HMRC to the companies when they register for tax.
All companies in the UK have a nine-digit long VAT number and often have the prefix-GB (prefix appointed to VAT registrations in the UK). This number is essential for the companies to carry out their businesses as it becomes their identity to deal with other corporations.
Importance of vat number
Always check your VAT Number before entering it anywhere. For example, while filing your tax return, if you end up entering the wrong VAT number, HMRC might disallow you from claiming tax and invalidate your invoice. This will leave you to face a lengthy paperwork issue.
These are primarily innocent mistakes, but some companies fraudulently use other companies’ VAT Numbers.
Checking the validity of vat registration number
It is difficult for a company to know if their business counterpart’s VAT Registration number (VRN) is legitimate or not. But you can check it using the following two ways:
1. Use the HMRC VAT Helpline
To verify that a given VAT number is valid or not, call the HMRC Helpline on
0300-200-370 anytime between 8 am to 8 pm throughout the week. But this method has certain disadvantages.
The first one is that it can only be used to check the VAT Numbers of UK-based businesses and not a company registered outside the UK.
The second disadvantage of using the helpline is that you might need to check the VAT Numbers sometimes outside the helpline working hours due to urgency. And hence you will have to wait to speak to a staff member. Even when the helpline is open, this might not be the best option.
2. Using VAT Information Exchange System (VIES)
Aside from the helpline, many businesses in the UK use this way to validate a VAT Number, that is, by using a digital platform named VAT Information Exchange System (VIES). This portal is operated by the European Commission and can help you check the validity of the VAT Number of any business/company registered across the European Union (EU).
This system uses real-time data feeds from the individual member states’ VAT systems so that the data on their website is up to date at all times. This portal was set up primarily to counteract the issue of ‘carousel fraud’ whereby innocent and not guilty businessmen/companies were finding themselves caught in a growing chain of fraudulent and deceitful transactions.
To authenticate the validity of a VAT number through VIES, follow the following steps:
- Go to this page of the European Commission’s website: https://ec.europa.eu/taxation_customs/vies/vieshome.do?selectedLanguage=EN.
- Select the following details from the given drop-down menu:
- Member State and its VAT Number
- Requester Member State and its VAT Number
The portal will now let you know whether the VAT Number or VRN you entered is valid or not. If it is a legitimate VAT Number, the website will provide you with further details about the business, such as the company name and its registered office address, depending on that area’s local data protection rules.
Actions to take after a vat number is validated
Once you have verified your own or any other business’ VAT Number, save a copy of your search results on the VIES portal to prove the authenticity of your business transactions if ever questioned by HMRC.
A business with a VAT Number is zero-rated on the VIES Portal, and this can be useful for business deals with other European Union companies.
What to do if a vat number is invalid?
If the VAT Number entered by you is shown invalid by the VIES Portal, contact the company immediately whose VAT Number you wanted to authenticate. This is more likely to happen due to an innocent mistake, and ask the company to give you the correct VAT Number.
If the VAT Number stands corrected and it is still shown invalid by the VIES Portal, contact HMRC to update the details in the national VAT Information Exchange System portal with the proof of any previous VAT invoice of the company.
Reclamation of VAT
It is possible to reclaim VAT on supplies if you have a valid VAT invoice from the supplier. The VAT Invoice shall have the following details:
- The company/supplier’s Name
- The company/supplier’s address
- Invoice Number (unique to every transaction)
- Details and description of the goods or services that were supplied
- Date of the Invoice or creditor turnover period
Always check the above details first and also the supplier’s VAT number while claiming a VAT, especially when it is a considerable amount. If any incorrect data is found in the information provided above, Her Majesty’s Revenue and Customs can decline your claim request.
If you wish to gain more details about the company that you are dealing with, you can easily find them, for free. Such details include:
- Company’s date of incorporation and registered address
- Any previous names of the company
- Current and previous/retired officers
- Information regarding bankruptcy
- Data regarding mortgage charges
If you would like to know any more details such as annual returns, annual reports, company accounts, and confirmation statements, you need to pay an amount of £1.
All these details are available on: https://find-and-update.company-information.service.gov.uk/.