The majority of houses know or have heard about VAT. But they might not know that VAT constitutes one-third of the various revenue collected by the government. VAT is applicable on the various purchases made by us regularly. Despite its significance, people know the least about VAT.
VAT applies to every good and service you buy. But, from a business perspective, VAT is different. VAT usually does not impact the business, yet it is a crucial part of their operations, and failing to do it correctly can lead to significant problems. Business houses must know about VAT and their VAT number.
We will cover the following topic related to the VAT registration number.
- What is VAT?
- What exactly is the VAT Number?
- How to locate the VAT number of any other company?
- How can you tell whether a VAT Number is accurate?
- Wrapping up
What is VAT?
The concept of VAT was introduced in 1973 in the United Kingdom. VAT is paid on all types of goods and services you purchase and applies to other taxable items bought and sold inside the United Kingdom.
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What exactly is the VAT Number?
The VAT Number is a nine-digit code issued by HMRC to every business. It comprises of two parts. The first part comprises the two fixed letters “GB” followed by a nine-digit code which is different for every business. If you have recently established your business, the VAT registration certificate will contain your VAT Number, and HMRC issues this certificate.
The VAT number will change if you work with a manufacturer or supplier across the European Union. The VAT number can vary from 9 digits to 15 digits. In addition to the unique code, it will also contain two letters that designate the country where the business operates.
Refer to this table to understand the format of VAT numbers across the EU.
| Country | Country Code | Format | Characters | Note |
| UK | GB | 123654796 | 9 | 9 Character Code |
| Austria | AT | U12346579 | 9 | 9 characters with the first character as ‘U’ always. |
| Belgium | BE | 12345786190 | 10 | Prefix a zero if the characters are 9. |
| Cyprus | CY | 12345678L | 9 | 9 characters with the last character as alphabet always. |
| Denmark | DK | 12345678 | 8 | 8 Character Code |
| Italy | IT | 12345678901 | 11 | 11 Character Code |
| Hungry | HU | 12345678 | 8 | 8 Character Code |
How to locate the VAT number of any other business?
VAT number is crucial for every business, as mentioned earlier. You can locate the VAT number of the business on the invoice issued by the supplier or the company. You can also discover the VAT number on other company documents, such as the insurance paper, claims or any other documentation the company holds.
The VAT number is a 9-digit number succeeded by two alphabets. If you cannot locate the VAT over the invoice, you can find the number at Companies House in the UK. You must know the name of the firm as well as its headquarters.
How can you tell whether a VAT Number is accurate?
The supplier must have a valid VAT number to claim the VAT on any invoice. You will not be eligible to receive the VAT refund if you have an invalid VAT number, and you will be stuck bearing the amount along with the tremendous amount of paperwork to resolve the matter.
It makes it crucial that you check the VAT number of the supplier, especially if you have recently begun working with them. To check the VAT number of a company, you can use one of the following methods:
1. Getting in touch with HMRC professional
A comprehensive database of all the registered firms is available with HMRC. The database is crucial as it helps the individual seek VAT-related information related to a business. If you want to verify whether a company has a legit VAT registration number, you can HMRC VAT helpline to inquire about the same. The number for the helpline is 0300 200 3700.
2. Performing an assessment on the VIES site
VIES (VAT Information Exchange System) is a website that allows you to check the correctness of any VAT-registered business across the European Union (EU). The website has an easy-to-use interface. You have to give a few basic details about the business. The details include the name of the country where the business operates and the company registration number for which you want to evaluate the validity. After providing the details, the website will check and prompt the result. The website also confirms the name and registered location of the business. The website was created to avoid any VAT-based fraud.
3. Checking the validity yourself
Since the number is unique, you can check its validity by following these steps for any UK VAT-registered business:
- Arrange the number vertically, excluding GB.
- Multiply the first digit by eight and the second digit by 7 to the seventh digit.
- Now add all the numbers together and subtract 97 from it until the result is negative.
- The VAT number is valid if you obtain a negative number as the answer equivalent to the last two digits of the actual VAT number.
For better understanding, consider the VAT number of a company as GB 365684513
| Number | Result |
| 3 x 8 | 24 |
| 6 x 7 | 42 |
| 5 x 6 | 30 |
| 6 x 5 | 30 |
| 8 x 4 | 32 |
| 4 x 3 | 12 |
| 5 x 2 | 10 |
| Total | 180 |
Now, we will subtract 97 twice from the total sum to get a negative-sum
Therefore, 180-97-97 = -14
The answer is negative but not equivalent to the last two digits of the VAT number, which confirms that the VAT registration number is invalid.
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Wrapping up
To receive your claim, you must have the correct VAT registration number, which makes it crucial to check all the companies that work with you. Follow the things described in the article, and you are good to go!
