VAT registration number requered?


VAT registration number- a short note


VAT registration number is also called the TIN number or tax identification number. This identification number helps when it comes to identifying taxpayers and in administration of national tax related affairs. Banks and other financial institutions have to maintain a record of name and address of the account holders and if present then the VAT registration number or TIN number. TIN and personal and income related details should be disclosed to tax authorities every year. The national authorities decide the specifications of the TIN for example its structure and syntax. Few countries have a different structure of TIN for different categories of individuals for example foreign residents and nationals.


The European commission has started a project to help the stakeholders wherein the information related to VAT registration number or TIN which the member states voluntarily choose to publish is displayed online in a database. There is no central EU TIN system and some EU countries do not recognize TIN at all. The European commission had earlier launched two public consultations on given measures which if implemented would improve the collection of taxes and bring about better tax compliance. One of these subjects was the European Tax Identification Number or EU TIN. This besides being a move for identification of taxpayers is also a move for handling tax fraud and tax evasion. These measures came about in the light of the fact that because of increased mobility of people and more and more cross border economic activity it was becoming difficult to identify taxpayers. This move would also bring about more taxpayers compliance and transparency.


Different countries have different structures for the TIN number and refer to this identification number with different terminology such as social security number, national insurance number, personal identification number and employer identification number. There are different uses of a TIN and legal entities such as corporations, estates and trusts and even some individuals have to use these numbers when tax returns have to be filed. When it comes to sole proprietors TIN becomes their social security number or an identification number for employees. Even for corporations and other legal entities such as trust and estates and partnerships this TIN becomes their employee identification number.


Financial institutions have to keep a record of all countries in which customers are tax resident plus they also have to keep a record of TIN numbers of customers who are tax resident outside UK. Finally the information that the financial institution has to supply to the HMRC via its annual reports is certain account information of its customers when these customers have one or more principal homes or permanent establishments outside UK.


I would like to conclude by saying that a tax identification number makes sure that the people do not have pay tax twice and double taxation is avoided and at the same time any misunderstanding that may take place among tax payers who do not understand the tax regime will be avoided as well.