Hitting £90,000 in rolling 12-month turnover is a milestone. A sign your creative business is growing. But it also triggers a very real obligation: you must register for VAT.
If this is the first time you’ve crossed the threshold, it can feel confusing, admin-heavy, and slightly terrifying. Don’t worry. Here’s what actually happens, how long it takes, what you should (and shouldn’t) do, and how an accountant can help you avoid the pitfalls.
Work out when you crossed the threshold
VAT registration isn’t based on tax years or calendar years. It’s a rolling 12-month calculation. So you look back at the last 12 months, every month, and check whether your taxable turnover has exceeded £90,000.
Once you cross the line, you must tell HMRC within 30 days.
If you’re not already tracking this monthly, don’t worry. Most creatives aren’t. This is one of the first things I check when onboarding a client.
Registering for VAT, and how long it takes
You submit your registration online (or your accountant does it for you).
Current processing times are around 3 weeks.
Sometimes it’s quicker; occasionally it’s longer if HMRC have questions or need to run further checks.
During this waiting period, you are technically already VAT-registered from your effective date of registration, you just haven’t received your VAT number yet.
This is where things can get messy if you don’t know the rules.
What if you need to invoice before you get your VAT number?
This is one of the biggest panic moments for creatives.
Here’s the correct approach:
Option A — Delay issuing your invoice (if cashflow is not a problem)
You deliver the work, you let your client know your VAT registration is in progress, and wait for your VAT number before invoicing.
Option B — Issue a holding or "proforma" invoice (with or without the additional 20%)
In order to expedite payment, you can send an invoice (with the additional 20% added if you choose) while waiting, but you cannot describe that additional amount as VAT, and your client is not obliged to pay it.
You should state on the invoice:
- “VAT registration pending”
- “A VAT invoice will follow once the VAT number is confirmed”
Once your VAT number arrives, you can issue a second invoice - either to replace the proforma, or to charge for the additional VAT element only.
Do not charge VAT before you have a VAT number. You can’t legally show it on the invoice yet.
Once your VAT number arrives
You can finally:
- Start issuing VAT-inclusive invoices
- Update your invoice template
- Update Xero (or whichever software you use)
- Notify clients, especially if they work with purchase order systems
- Back-invoice VAT for any earlier “VAT-pending” work
- Check whether the Flat Rate Scheme or Cash Accounting Scheme might suit you
Your accountant should walk you through this and, importantly, test your setup so your first return doesn’t become a detective mission.
What about your suppliers?
Especially overseas digital suppliers?
A lot of creatives use digital tools where the supplier is based overseas, such as OpenAI, Framer, Figma, MotionArray, Vimeo, Notion, Google Workspace etc.
Once you’re VAT-registered, this may change how they invoice:
EU-based digital suppliers
Many EU-based subscription services should stop charging you their local VAT once you give them your UK VAT number.
If you don’t do this, you’ll end up paying foreign VAT you can’t reclaim. A pure cost to your business.
US and non-EU suppliers
Most don’t charge VAT at all, which means the reverse charge applies. Your accountant will handle the VAT accounting for these. You just need to make sure the invoices are correct and that your books are set up for reverse-charge transactions.
However, some might assume that until you had a VAT number you were a consumer rather than a business. Which means they may have been adding UK VAT to their invoices even though they shouldn't.
If you now notify them you are VAT registered they should stop adding VAT to their invoices.
Common pitfalls that trip creative business owners up
❌ Assuming you only register once you pass £90k “in a year”
It’s a rolling 12 months, not April–April or January–December.
❌ Charging VAT without a VAT number
HMRC really don’t like this.
❌ Forgetting to update digital suppliers
Especially Adobe, Google, Notion, Dropbox, Canva, etc.
Incorrect VAT means:
- You may pay more than necessary
- Your bookkeeping becomes a mess
- You risk errors in your VAT return
❌ Not setting up your bookkeeping system correctly
Typical issues:
- Getting the start date for VAT wrong
- Reverse charges handled incorrectly
- Flat Rate Scheme not operated correctly
- Opening VAT balances wrong
All easy to fix, but only if you know what you’re looking for.
❌ Missing the registration deadline
If you tell HMRC late, they can charge penalties and back-date VAT on past invoices.
How an accountant can help (and why it matters now)
VAT isn’t just an extra 20% line on your invoice. It affects:
- Pricing
- Profit margins
- Cashflow
- Admin burden
- How your systems work
- How your clients feel about your fees
A good accountant will:
- Register you correctly with HMRC
- Choose the right VAT scheme for your situation
- Set up your bookkeeping system so your VAT codes behave
- Review your digital subscriptions for foreign VAT traps
- Advise how to handle pre-registration costs
- Check you’re reclaiming VAT correctly from day one
- Make sure your first return isn’t a horror story
If your business is growing, getting this right early saves a lot of pain later.
The good news — VAT doesn’t have to be scary
VAT is one of those moments where your business grows up. Yes, there are rules. Yes, the admin steps up. But once everything is set up properly, most creatives barely notice a difference.
And often — especially if most of your clients are VAT-registered agencies or production companies — VAT becomes a neutral cashflow process, not an extra cost.
Handled properly, it shouldn’t get in the way of your creativity.
If you’d like help navigating this (or you’ve just realised you’re creeping towards the threshold), send us a message. We can make the whole process painless — and make sure you stay on the right side of HMRC while your business keeps growing.
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