Don’t let registration with HMRC catch you out!

Given the fact I am heavily involved in the startup market, I often get quizzed about when to register with the various authorities as it can be quite a daunting task when you starting out.

As I have said in previous blogs, a lot of people get caught out because they don’t set things up correctly at the outset – investing a bit of time upfront can pay dividends going forward (and save considerable hassle).

If you are self employed, the key issues to be addressed are (

  • You need to inform HMRC that you intend trading – this is done using form CWF1. Once this has been completed you will be issued with a Unique Tax Reference (UTR) that will be used for all future HMRC correspondence. This will ensure HMRC know of your requirement to complete a tax return. Self Assessment is all based round the fact it is your responsibility to inform HMRC of the trade so don’t wait to be asked by them to register.
  •  You will also need to register to pay Class 2 National Insurance Contributions. This can be done using form CA5601 if you wish to pay by direct debit.
  •  If you are going to get an Accountant to deal with such matters they will ask you to fill in a mandate 64-8 so they can deal directly with HMRC on your behalf. This will be lodged with HMRC after signature.

If you are to trade as a limited company (

  • Firstly the company needs to be set up and registered at Companies House (subject of another future blog).
  • Complete form CT41G to inform HMRC of intention to trade detailing year end date.
  • Again if you are going to get an Accountant to deal with HMRC on behalf of the company then once more a mandate 64-8 must be lodged with HMRC.

In addition to the above you will need to consider VAT registration as a separate issue (regardless of the type of entity that you trade as)(

  • If your annual taxable supplies of your business are going to exceed £73,000 (current threshold requirement) then you will need to register immediately.
  • To register you will need to complete form VAT1.
  • Some businesses consider immediate registration to give their business ‘status’ in the outside world.
  • Others register immediately as they don’t want to have to go back to customers once registration has taken place to add VAT onto pre-agreed rates (there can be cashflow implications for all parties concerned if this is not handled correctly).
  • You might want to think about registering for online filing as this can provide cashflow benefits and from April 2012 will become mandatory.

All of the above is on top of other set up issues such as opening bank accounts, signing engagement letters, agreeing terms and conditions with customers and suppliers, etc etc which can be quite a task. It shouldn’t be that way if you can find someone to help guide you through the process.

Until next time,


Simon can be contacted on 0141 290 2620 or follow him on twitter @simonmurrison