VAT and Customs: General Information

Use this service to check:

• if a UK VAT registration number is valid
• the name and address of the business the number is registered to

Check a UK VAT Number

VAT registration and deregistration limits

The VAT registration limit from the 1 April 2017 is £85,000 per annum.

You should remember that this is taken over a rolling period of 12 months, not just over your financial year. 

The deregistration limit is £83,000 from 1 April 2017.

Registering for VAT

Deregistering for VAT

You can use Faster Payments, BACS, CHAPS or Bank Giro Credit Transfer.

You can also use online services to pay by debit or credit card.

Further guidance can be found on the Payments page.

The simplest way to tell us about an error on a submitted VAT return is to use form VAT 652 MAN Notification of Errors.

The error correction reporting threshold applies to net errors that are the greater of:

• £10,000, or
• 1 per cent of the Box 6 figure required on your VAT return for the period when you discover the error - subject to an upper limit of £50,000 or above which must be reported to IOM Customs and Excise.

If there are errors, which you have not disclosed and we discover them you could incur a penalty.

Further details may be found in VAT Notice 700/45.

VAT Annual Accounting Scheme

By applying to use the Annual Accounting Scheme you can reduce the number of VAT returns from 4 to 1 per year. The upper turnover limit to use the scheme is currently £1,350,000.

Under the scheme you will make 9 payments each of approximately 10% of the VAT payable with a final balancing payment, thereby spreading your liability over a greater time period, as well as substantially reducing the amount of administration involved in running your business. To apply you must use form VAT 600 AA MAN.

Further details may be found in VAT notice 732. 

VAT Cash Accounting Scheme

VAT is normally due and payable at the time when a supply of goods or services is treated as having taken place. This is called the tax point. You must account for VAT in the tax period that the tax point occurs.

However, if you use the Cash Accounting Scheme, this allows you to account for output tax on the basis of payments you have received, rather than on tax invoices that you have issued. This may be helpful to your cash flow, especially if you allow your customers extended credit or suffer a lot of bad debts. The upper turnover limit below which business can use this scheme is £1.35 million.

Further details may be found in  VAT notice 731.

Claiming input tax

The goods or services being claimed for must have been provided to the person who is currently registered for VAT. If this is the case you can go back 6 months for services, provided they were not related to goods which you disposed of before you were registered. You can go back up to 4 years prior to registration for goods that are still on hand.

Further details may be found in the VAT Guide, notice 700 sections 10 – 12.

Fuel scale charges

If you use a motor car in your business and claim back VAT on the road fuel then you must consider whether to pay scale charges or not. These charges are to cover any private element of the fuel bought. By paying the scale charge you can recover all of the VAT on the road fuel, both business and private. You have the option not to pay the scale charge but if you do so then you cannot recover the VAT on fuel on any cars that are used by your business for business and private use.

See also:

Fuel scale charges

Claiming VAT back on bad debts

There is a scheme called Bad Debt Relief. To claim this you must:

• Have already accounted for the VAT on the supplies and paid it to Customs and Excise
• Written off the debt in your VAT accounts and transferred it to a bad debt account
• The debt must be over 6 months old

Where a part payment is received, the amount of bad debt relief claimed must only relate to the part of the balance still outstanding.

If, after having claimed bad debt relief you subsequently receive part or full payment of the debt then you must account for VAT on any amount received.

Further details can be found in VAT Notice 700/18.

Selling your business as a going concern

If the person you are selling your business to is operating the same kind of business, is registered for VAT at the time of the sale, is opening for business immediately after the sale and is using the assets purchased to operate the business, then the sale is not considered to be a taxable supply, and VAT should not be charged.

Further details may be found in VAT notice 700/9.

Reclaiming VAT when building your own house

The DIY Refund Scheme allows individuals who build new houses, or convert non-residential properties into dwellings for their personal use to recover VAT on certain building materials.

For further details please see the appropriate guidance notes on completion of forms VAT 431NB MAN for new houses and VAT 431C MAN for conversions.

Reduced rate of VAT on domestic property repairs works

Contractors working on properties in the Isle of Man can charge the reduced rate of 5% VAT on the majority of household repairs, renewals and extensions. Ineligible properties include shops, offices, hotels and commercial buildings. The supply of goods only is not allowed. To qualify the goods must be supplied and installed.

Further details can be found in our public notice reduced rate of VAT on domestic property repairs.

Under normal circumstances VAT is payable on supplies made to and by charities, but there are some exceptions such as fund raising events which may be exempted. Advertising services to charities, the supply of sea rescue equipment, donated medical and scientific equipment and medicinal products can be zero rated.

Further details can be found in VAT notice 701/1.

Bringing goods into the Isle of Man for personal use

If you’re travelling to the Isle of Man from outside the UK, your personal allowances mean you can bring in a certain amount of goods without paying tax or duty.

Please see Notice 1006 Man for further guidance.

When you’re bringing in goods you must:

• transport them yourself
• use them yourself or give them away as a gift

If you go over your allowances you must declare all your goods and pay tax and duty on all the goods in that category, the allowances are as follows:

Tobacco Allowance

• 200 cigarettes
• 100 cigarillos
• 50 cigars
• 250g tobacco
• 200 sticks of tobacco or electonic heated tobacco devices

Alcohol Allowance

• 42 litres beer
• 18 litres wine (still)
• 4 litres spirits and other loquors over 22%
• 9 litres sparkling wine, fortified wine (for example port, sherry) and other alcoholic drinks up to 22% alcohol (not including beer or still wine)

Allowance for other goods

• £390 worth of all other goods including perfume, gifts and souvenirs, or
• £270 worth of goods if travelling by private plane or boat for pleasure purposes

Please note: There are conditions that apply to your allowances. These include: 

• If you go over your allowance you pay tax and duty on the total value of the goods, not just the value above the allowance.
• You cannot combine your personal allowance with anyone else.
• You can split your alcohol allowance, for example you could bring 4.5 litres of fortified wine and 2 litres of spirits (both half of your allowance).
• You can split your tobacco allowance - so you could bring in 100 cigarettes and 25 cigars (both half of your allowance).
• You may have to pay import VAT on the total value of the goods plus duty. You pay this at the current UK VAT rate. 

Example

If you bring in:

• 200 cigarettes and 50 cigars, you must pay tax and duty on both the cigarettes and the cigars because you have gone over your allowance in the tobacco category
• 19 litres of wine, you must pay tax and duty on all of it because you have gone over your 18 litres allowance for wine.

Declaring goods made or produced in the EU

You do not need to pay any tax or duties on personal goods you bring into the Isle of Man as long as they are within your personal allowances.

If the goods are over your allowances you will need to:

• declare them
  
• pay any customs duty due
• pay any excise duty due (for tobacco or alcohol)
• pay any import VAT due

When you declare your goods you need to declare each item you bought. When you declare your items, you may not need to pay customs duty on items where all the following are true:

• they were grown or made in the EU using only EU ingredients or materials
• you bought them in the EU
• you are bringing them in from an EU country

If these are true, you can claim a zero rate of customs duty for each item. You must:

• have evidence these are true for each item you claim these rates for
• be able to show this evidence if asked by an officer

The level of evidence you need depends on the total value of all the items you claim these rates for.

If the total value is less than £1,000

If the total value of all the items you declare is less than £1,000 the evidence for each item can be:

• a label or packaging showing it was grown or made in the EU
• evidence it was hand-made or grown in the EU (for example, a document or written note from the person or business you bought it from)

An officer might ask to see this evidence. If you are unable to show this, you will have to pay any customs duty you owe.

If the total value is more than £1,000

If the total value of all the items you declare is over £1,000, you can claim a zero rate of customs duty if you can prove each item was grown or made in the EU.

This proof could be an invoice or document from the person or business you bought the items from which includes the:

• item you are buying
• place and date you bought it
• ‘statement on origin’

The ‘statement on origin’ is formal wording from the person or business you bought the items from which confirms:

• the material used to make the item was from the EU
• their registered exporter number (if the total value of all the items you declare is over £5,500)

You could also prove that you know how the items were made in the EU by using documents or records which show the item meets the rules of origin. The ‘importer’s knowledge’ section of the proof of origin guide) explains how you do this. This applies if you bring in (import) these items for either personal or commercial use.

An officer might ask to see this evidence. If you are unable to show this, you will have to pay any customs duty you owe.