You are encouraged to check the validity of the EU VAT number of your customers and suppliers on a regular basis. Especially before you remove the VAT from your invoice. After all, you would require this information when completing your EC Sales List.
For your information, the abbreviation of EU and VAT stand for European Unions and Value Added Tax respectively.
Generally, how a VAT registered company works is discussed below.
UK VAT number
First of all, you may find your VAT registration number on your VAT registration certificate issued by HM Revenue and Customs (HMRC).
It is made up of 9 digits with two letters GB at the front of the nine digits i.e
GB 111 2222 33.
Secondly, you must submit VAT returns with HMRC. This is to avoid your VAT registration number being rendered invalid or cancelled because of non-filings. If you require help with the preparation and filing of your quarterly VAT returns, our accountants will be more than happy to assist you.
Genuine VAT number
Another reason it’s important to check the EU VAT registration number is to ensure the VAT registration numbers are genuine. With this, you can avoid paying for VAT on your goods and services where you are not obliged to. Always remember that only VAT registered businesses are allowed to charge VAT to their customers.
For example, If you paid for VAT on purchases to suppliers that do not have valid VAT numbers you will not be able to reclaim that VAT amount in your VAT return. HM Revenue and Customs would not issue the refund. You lose out in this situation.
So It is important that you verify the VAT number before you either remove it from your sale invoice for EU Customers. Likewise, you also check your suppliers who claimed they are VAT registered before you pay them. Especially when the VAT amount involved is considerable. This is to avoid scamming. This practice also creates awareness and ensure everyone takes part to make sure VAT compliance function as it should be.
UK VAT company registered do not normally charge VAT to customers from European Countries who can provide valid TVA or VAT numbers.
However, before you remove your VAT amount from your sales invoice, it is strongly recommended you verify the TVA or VAT numbers of your customers. Take note of the VAT number accordingly. You would need this information when completing your EC sales list too.
Invalid VAT registration numbers
In short, If the VAT or TVA numbers appeared to be incorrect, inform your customers or suppliers so they can contact their home country tax office or accountants to verify the situation.
Likewise, If your customers are highlighting to you that your VAT numbers are invalid, contact your accountants as soon as possible if you have one. Otherwise, you may contact HM Revenue and Customs VAT helpline for advice.
Sometimes, HMRC cancels VAT numbers of a company because they never receive a VAT return. Or Companies House has struck off your company. This could happen when you do not act on Companies House reminders to file your company accounts and confirmation statement.