Can I register for VAT before I start trading

Q: What happens after registration?

Returns from day one. A return is due for every period, even if there is nothing to pay or reclaim (Notice 700/1, paragraph 3.9). Repayment checks. Early returns will be repayment claims, which HMRC may check before paying; see VAT repayment return checks. Post registration review. VATREG22850 says intending trader registrations are reviewed to see whether the intention remains or trading has begun, normally as part of the first assurance visit. VATREG22900 adds that local offices receive a report every six months listing traders still classed as intending 21 months after registration. Input tax checks. At review, officers check that claims have been restricted to items directly and wholly attributable to intended taxable supplies and that nothing attributable wholly or partly to exempt supplies has been claimed (VATREG24100). Return frequency. A trader given monthly returns because it was always in repayment may be moved to quarterly returns once it becomes a payment trader (VATREG24050).

Q: How does this work in practice?

Illustration only. A new company plans to open a restaurant. In January it pays an architect £10,000 plus £2,000 VAT for designs, and between March and September it pays builders and buys kitchen equipment. It opens in November. Registered as an intending trader in January with the architect's invoice, a lease offer and the business plan as evidence: the £2,000 and the VAT on later costs are reclaimed on its monthly or quarterly returns as they are incurred. Registered in November when trading starts: the kitchen equipment it still holds can be claimed under the pre registration rules, but the architect's services were supplied more than six months before registration, so the £2,000 is lost, as is VAT on any building services supplied before May.

Yes. A business that has not yet made a sale can ask to be registered as an intending trader under paragraph 9 of Schedule 1 to the VAT Act 1994, as long as HMRC is satisfied that it is already carrying on a business and intends to make taxable supplies. HMRC normally asks for objective evidence of both, such as invoices for set up advice, finance correspondence, draft contracts, tender bids or planning applications, and it reviews the registration later to see whether trading has started.

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Who counts as an intending trader?

HMRC’s VAT Registration Manual (VATREG21550) defines an intending trader as a person who, on the date of the request, is carrying on a business, has not started making taxable supplies and intends to make them in future. VATREG21550 notes that such traders normally want registration from a current date so they can reclaim VAT on setting up and developing the business, sometimes over a long period.

The legal basis is paragraph 9 of Schedule 1, which requires HMRC to register a person who is not liable to be registered and who satisfies HMRC that they are carrying on a business and intend to make taxable supplies in the course or furtherance of it. VATREG22000 says a person carrying out preparatory activities to set up a business is treated as in business, relying on the European Court’s decision in Rompelman and the tribunal in Merseyside Cablevision. Before approving an application, officers must be satisfied that:

the applicant is carrying on a business
the business involves making, or intending to make, taxable supplies
those supplies will be made by the applicant itself

The applicant does not have to say when taxable supplies will start or estimate their value (VATREG21950), and once HMRC accepts the intention, the person cannot normally be refused registration (VATREG22000). VAT Notice 700/1, paragraph 3.9, confirms that you can apply before you start to make taxable supplies and that HMRC may ask you to show that you plan to make them.

Why register before the first sale?

From the effective date of registration a business can reclaim VAT on what it buys, subject to the normal rules. Waiting until trading starts relies instead on the relief for VAT incurred before registration, which Notice 700/1, paragraph 5.2, limits to goods supplied up to 4 years before the registration date that have not been used up or sold, and services supplied not more than 6 months before it. For a project with a long build or development phase, the six month limit on services is usually the deciding factor, because design, professional and construction services bought early on fall outside it. The pre registration rules are covered in reclaiming VAT on costs before registration, and the wider decision in voluntary VAT registration.

An intending trader is usually in a repayment position. VATREG22700 says intending traders may be allowed monthly returns if the value of their intended taxable supplies exceeds the registration threshold, which speeds up cash flow during the set up phase.

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Is this the same as asking for a later registration date?

No. HMRC distinguishes intending traders from advance notification cases (VATREG21600). Under VATREG18350 HMRC may accept an application asking for an effective date later than the date of application, provided the person is not liable to be registered earlier, is entitled to be registered on the requested date and the date is within three months of receipt. If the application shows that no taxable supplies will have been made by that date, HMRC treats the applicant as an intending trader and asks for evidence of intention.

What evidence does HMRC ask for?

VATREG22050 records that applicants have to support their application with objective evidence, and that if HMRC writes asking for it and the trader does not respond, the application may be treated as withdrawn. There are two things to show.

What HMRC must be satisfied of	Examples HMRC gives
That a business exists or is being set up (VATREG22100)	Invoices for start up costs such as accountancy or consultancy advice; correspondence with banks or lenders about finance; efforts to contract for stock or for supplies to customers; a current competitive tender bid; actual or proposed advertising; current planning applications for a business purpose; accountants’ letters, business plans and minutes of meetings
That the business will make taxable supplies, not only exempt ones (VATREG22150)	Often the same evidence: a contract or tender showing the intended outcome is a taxable supply needs nothing further

The manual stresses that the list is not exhaustive, that a single piece of evidence may be enough and that requests should be kept to a minimum. Property ventures need care because many supplies of buildings are exempt unless the owner opts to tax; VATREG22200 deals with applicants who intend to make taxable property supplies. See option to tax.

A practical evidence file usually contains the business plan, the first quotes or invoices for set up work, any signed or draft contracts or letters of intent from customers, finance offers, and planning or licensing applications. Dates on these documents should support the registration date requested.

Can the registration be backdated?

Only at the first application. VATREG21650 says an intending trader asking for an earlier effective date must show they would have satisfied HMRC at that earlier date of a firm intention to make taxable supplies, and that retrospection is restricted to three years before the date the application is received. For voluntary registrations generally, Notice 700/1, paragraph 3.9, warns that a request to amend the registration date carries no right of appeal or review and that the date cannot be changed once registered, so the date should be chosen with the pre registration calculation in mind.

What happens after registration?

Returns from day one. A return is due for every period, even if there is nothing to pay or reclaim (Notice 700/1, paragraph 3.9).
Repayment checks. Early returns will be repayment claims, which HMRC may check before paying; see VAT repayment return checks.
Post registration review. VATREG22850 says intending trader registrations are reviewed to see whether the intention remains or trading has begun, normally as part of the first assurance visit. VATREG22900 adds that local offices receive a report every six months listing traders still classed as intending 21 months after registration.
Input tax checks. At review, officers check that claims have been restricted to items directly and wholly attributable to intended taxable supplies and that nothing attributable wholly or partly to exempt supplies has been claimed (VATREG24100).
Return frequency. A trader given monthly returns because it was always in repayment may be moved to quarterly returns once it becomes a payment trader (VATREG24050).

What if the plans change?

Input tax claimed as an intending trader is provisional. HMRC’s manual sets out three outcomes:

if only exempt supplies are made, the input tax claimed must be repaid (VATREG22400)
if an exempt supply is made first but the intention to make a taxable supply remains, such as a short exempt letting before a taxable sale, HMRC apportions the input tax and claws back only an appropriate amount, following Briararch and Curtis Henderson (VATREG22450)
if the intention to trade is abandoned and no supply is made, input tax on the intended taxable supply need not be repaid, but output tax is due on the cost value of goods on hand at deregistration (VATREG22500); see VAT deregistration

How does this work in practice?

Illustration only. A new company plans to open a restaurant. In January it pays an architect £10,000 plus £2,000 VAT for designs, and between March and September it pays builders and buys kitchen equipment. It opens in November.

Registered as an intending trader in January with the architect’s invoice, a lease offer and the business plan as evidence: the £2,000 and the VAT on later costs are reclaimed on its monthly or quarterly returns as they are incurred.
Registered in November when trading starts: the kitchen equipment it still holds can be claimed under the pre registration rules, but the architect’s services were supplied more than six months before registration, so the £2,000 is lost, as is VAT on any building services supplied before May.

What are the common mistakes?

Applying with a bare statement of intention and no supporting documents, then not answering HMRC’s request for evidence.
Applying in the name of a person or company that will not itself make the taxable supplies.
Registering where the only intended income is exempt, for example residential lettings, and then having to repay the VAT reclaimed.
Claiming VAT on costs that relate partly to exempt or private use without apportioning.
Asking for a backdated date without evidence that the intention existed at that date.

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Reviewed by Christine Anderson, Broker, Solar Protect. Last reviewed 24 October 2026. Part of Accountapedia, the Solar Protect guide to UK tax and accounting. This page is general information, not personalised advice.