While your VAT registration is pending you cannot show VAT on your invoices, but you still owe HMRC VAT on sales made from your effective date of registration. HMRC’s answer is to raise your prices to cover the VAT, tell customers why, and then issue proper VAT invoices within 30 days of receiving your VAT number.
Why do I owe VAT before I have a VAT number?
Your liability starts on your effective date of registration, not on the day HMRC writes to you. If you register because you expect to go over the threshold in the next 30 days, that date is the day you realised it; if you register because the rolling 12 month total has gone over, it is the first day of the second month afterwards. HMRC then needs time to check the application, and Notice 700/1 asks applicants not to chase until 40 working days have passed. The result is a gap of weeks in which you are making taxable sales without a number.
Paragraph 5.1 of VAT Notice 700/1 says you must start keeping records and accounting for VAT from the date you become liable to register. Paragraph 4.6 adds that you must account for VAT from that date even if you did not charge it to your customers. The steps to apply, and the dates, are in how to register for VAT online.
Can I put VAT on an invoice while I am waiting?
No. GOV.UK states that you cannot include VAT on your invoices until you get your VAT registration number, and Notice 700/1 says not to show VAT as a separate item on any invoice until the number has been received. Notice 700, paragraph 19.5.1, adds that only a VAT registered person can issue a VAT invoice and that there are financial penalties for unauthorised issue.
That penalty is in paragraph 2 of Schedule 41 to the Finance Act 2008. It applies where an unauthorised person issues an invoice showing an amount as VAT, or as including an amount attributable to VAT, and an unauthorised person means anyone other than a registered person and certain others listed in the paragraph. Inventing a number, quoting a reference from the application, or adding a VAT line without a number is therefore the wrong way to deal with the gap.
How do I invoice during the gap?
The approach HMRC describes has three parts.
- Increase your prices to include VAT. GOV.UK says you can increase your prices to account for the VAT you will need to pay. The invoice shows a single gross price with no separate VAT figure.
- Tell your customers why. Notice 700/1 suggests explaining to VAT registered customers that you will send them VAT invoices later.
- Issue VAT invoices once the number arrives. Notice 700/1 says you should send the necessary invoices showing VAT within 30 days of receiving your number. Notice 700, paragraph 16.2.3, confirms that a newly registered business not yet told its number must issue the VAT invoice within 30 days from the date it is advised of the number, without needing to apply for an extension.
The replacement invoice must meet the normal content rules, including your VAT number, the tax point and the VAT amount in sterling; see what a valid VAT invoice must show.
What does HMRC’s own example show?
GOV.UK uses this example. On 1 May a business agrees a £100,000 contract to provide services. It knows turnover will go over the threshold in the next 30 days, so it registers and its effective date is 1 May. It owes VAT on any invoices raised from that date. To cover the VAT it tells the customer it will add 20% to the contract price and raises an invoice for £120,000.
When the VAT number arrives, it reissues the invoice showing the full amount including £20,000 VAT. The customer does not make any extra payment, but can now reclaim the £20,000 on its next VAT return. The supplier pays the £20,000 over to HMRC on its own return.
What if I cannot add VAT to the price?
Raising prices is not always possible. A consumer may refuse, or a price may already be fixed in a contract. Where the consideration for a supply is wholly money, Notice 700, paragraph 7.3, treats the amount paid as including VAT. At the standard rate of 20% the VAT fraction is 20/120, which is one sixth. So if you cannot add VAT, the VAT still has to be paid, but it comes out of the price you charged.
Illustration only. A sole trader’s effective date of registration is 1 March and the VAT number arrives on 10 April. During March:
- a business customer agrees to pay £2,400 instead of the usual £2,000, and is invoiced £2,400 with no VAT shown;
- retail sales to the public at unchanged prices bring in £600.
| Sale | What happens after 10 April | Output VAT |
|---|---|---|
| Business customer, £2,400 | Replacement VAT invoice issued by 10 May showing £2,000 plus £400 VAT | £400 |
| Retail sales, £600 | No invoice needed; VAT is one sixth of the takings | £100 |
| Total for March | Declared on the first VAT return | £500 |
The business customer recovers its £400 once it holds the VAT invoice. The trader keeps £2,000 from that sale but only £500 from the retail takings, because no price increase was made.
What does the customer need, and when can they reclaim?
A VAT registered customer needs a valid VAT invoice to support its claim. Notice 700, paragraph 19.5.1, says a document marked pro forma or “this is not a tax invoice” cannot be used as evidence for reclaiming input tax, and a customer who knowingly uses an invoice from an unregistered person to reclaim VAT commits an offence. The invoice you raise during the gap is therefore just a demand for payment. Your customer can reclaim only after your replacement VAT invoice arrives, which is why the 30 day deadline is important to them as well as to you. Where a valid invoice never arrives, see reclaiming VAT without a valid invoice.
Does this change if I join the Flat Rate Scheme?
No. VAT Notice 733, paragraph 7.3, says a business using the Flat Rate Scheme must still issue VAT invoices to VAT registered customers, showing VAT at the normal rate, while it pays HMRC the flat percentage of its VAT inclusive turnover. The same invoicing approach applies during the gap. The scheme is explained in our guide to the VAT Flat Rate Scheme.
What are the common mistakes?
- Showing VAT without a number. HMRC’s guidance is to show a gross price only until the number arrives.
- Waiting to raise prices until the number comes. VAT is due from the effective date, so any sale made at the old price in the gap bears VAT out of your own margin.
- Asking the customer to pay twice. In HMRC’s example the customer already paid the gross amount, so the replacement invoice simply shows the VAT within it.
- Missing the 30 day window for replacement invoices, which delays the customer’s reclaim.
- Forgetting your own costs. VAT on goods and services bought before and during the gap may be recoverable; see reclaiming VAT on costs before registration.
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Related Accountapedia entries
- The 30 day forward look test for VAT
- How to check a VAT registration number
- What happens if you register for VAT late
- The rolling 12 month test for VAT registration
- Credit notes, discounts and VAT
- The agricultural flat rate scheme
Sources
- GOV.UK: Print
- GOV.UK: Vat notice 7001 should i be registered for vat
- GOV.UK: Vat guide notice 700
- legislation.gov.uk: Act 2008 c. 9, schedule 41
- GOV.UK: Vat notice 733 flat rate scheme for small businesses
Reviewed by Christine Anderson, Broker, Solar Protect. Last reviewed 19 October 2026. Part of Accountapedia, the Solar Protect guide to UK tax and accounting. This page is general information, not personalised advice.