VAT Registration Costs for Crypto Businesses in the UK

Are you a cryptocurrency business operating in the UK? You need to understand Value Added Tax (VAT). Many businesses think crypto businesses don’t need to consider VAT, but that’s wrong.

You may need to register for VAT if your total taxable turnover exceeds the £90,000 registration threshold over the previous 12 months, or if you expect your taxable turnover to exceed £90,000 in the next 30 days. Taxable turnover can include zero-rated, reduced-rated and standard-rated supplies, while exempt and out-of-scope supplies are generally excluded.

Also, VAT registration costs for crypto businesses are zero. Registering for VAT directly with HM Revenue and Customs (HMRC) is free. However, you may incur professional fees for registration advice, VAT assessments, and ongoing compliance.

This guide explains VAT registration costs in the UK, what affects professional fees, and when a crypto business needs to register for VAT.

What Is the UK Crypto Business VAT Threshold?

If your taxable turnover exceeds £90,000, your crypto business needs to register for VAT. The VAT deregistration threshold is currently £88,000, subject to the relevant conditions. In the UK, there is no separate VAT threshold specifically for cryptocurrency businesses.

However, only supplies that count as taxable turnover are included when determining whether the threshold has been exceeded.

Does the £90,000 VAT Threshold Apply to Every Crypto Business?

Not necessarily. UK-established businesses generally need to consider the £90,000 taxable turnover threshold, but different rules can apply to businesses based outside the UK that supply goods or services to UK customers. Some non-UK businesses may need to register regardless of turnover, subject to the relevant rules.

How Much Does VAT Registration Cost for Crypto Businesses?

VAT registration costs are free for crypto businesses when you apply directly through HMRC. However, if you hire an accountant or tax adviser, you may have to pay professional fees.

In the UK, the accountant cost may range depending on the type and complexity of the work. Keep in mind that simple accounting services may cost less, but tax advice,  bookkeeping, business setup, and other specialist services can cost more.

Additional advice may be helpful for crypto businesses, where VAT treatment depends on the type of crypto-related transactions or services provided.

Is VAT Registration Costs for Crypto Businesses Really Free?

Yes, HMRC does not charge a fee to register for VAT. You can apply through the official HMRC website and register for VAT for free. While registration is free, you still must meet your VAT record-keeping and reporting obligations after your registration.

Generally, VAT records need to be kept for at least 6 years. However, a 10-year retention period can apply to businesses using the VAT One Stop Shop (OSS) scheme or that previously used the VAT Mini One Stop Shop (MOSS) scheme.

In addition to VAT record-keeping, you need to provide accurate business and turnover information and understand which VAT accounting scheme suits your business.

Remember that errors or late registration can result in additional VAT liabilities or penalties. So, advice may involve a separate fee, even though VAT registration with HMRC is free.

Note: Holding, buying or selling cryptoassets does not automatically mean a business has taxable turnover for VAT registration purposes. The VAT position depends on the supplies the business makes and the nature of its crypto-related activities.

How Much Are Crypto Accountant Fees for VAT Registration?

As mentioned, there are no VAT registration costs for crypto businesses, but hiring an accountant for VAT registration can incur fees.

Accountant fees for VAT registration vary depending on the business complexity and the level of support required. The following table shows the indicative UK market ranges:

Disclaimer: These are indicative estimates, not official rates. They can vary based on business complexity and the level of support you need.

You may pay more when your VAT position requires detailed analysis of cryptocurrency transactions, international customers, or different types of supplies.

Furthermore, some accountants may include VAT registration within a wider bookkeeping, tax, or accounting package.

What Affects the Accountants’ Costs for Crypto Businesses?

Understanding accountant costs is a crucial part of VAT registration costs for crypto businesses. The professional fees can vary depending on the nature and complexity of your cryptocurrency business. The following factors may affect the level of support required, which in turn impacts accountant fees.

Nature of the Crypto Business

The type of crypto-related activities you carry out can affect the VAT analysis you need. For example, cryptocurrency exchanges may need to consider the VAT exemption that can apply to qualifying exchange services.

Blockchain consultants may need to assess the VAT treatment of consultancy and development services.

Moreover, crypto trading platforms may need to review the VAT treatment of their transaction or exchange-related charges. NFT businesses, however, may need to assess the VAT treatment of their specific goods or services.

Complexity of Transactions

Another factor related to VAT registration costs for crypto businesses is business complexity. Although there are no HMRC VAT registration fees, accountants may charge based on your business transaction volume.

You may receive payment in pounds sterling, Bitcoin, stablecoins or other cryptoassets.

When a business supplies taxable goods or services in exchange for cryptoassets, VAT is calculated using the sterling value of the cryptoassets at the time of the transaction.

If your business has high transaction volumes, multiple wallets or complex payment arrangements, you may require additional accounting and VAT support.

International Customers and Transactions

In the UK, crypto businesses may have customers in different countries. If you supply services internationally, the VAT place-of-supply rules can affect whether UK VAT applies.

The treatment depends on the nature of the service, where the customer is located, and whether the customer is a business or consumer. So, an accountant may review your transactions and customer base before advising on VAT registration and ongoing compliance.

Since VAT treatment depends on the specific transaction or service, you need to assess the nature of your activities before determining your VAT registration obligations.

What Is VAT on Cryptocurrency Transactions in the UK?

Now that you have learned there are no VAT registration costs for crypto businesses, let’s discuss how much VAT applies to your cryptocurrency transactions.

VAT treatment depends on the type of crypto transaction or service.

Crypto Exchanges

Qualifying exchange-token transactions can be VAT-exempt where the relevant conditions are met. For instance, HMRC treats qualifying bitcoin exchange services involving the exchange of bitcoin for legal tender as VAT-exempt, subject to the conditions of the relevant VAT exemption.

Goods and Services

Typically, VAT applies when taxable goods or services are paid for with cryptocurrency, based on its sterling value at the time of supply.

Crypto Mining

Mining rewards are usually outside the scope of VAT where there is no identifiable customer or sufficient link to consideration.

You should assess your every activity separately because different VAT rules may apply.

Are There Any Hidden VAT Registration Costs for Crypto Businesses?

There are no HMRC VAT registration fees, but crypto businesses may incur separate costs associated with VAT compliance, such as accounting software, professional advice and bookkeeping. Late registration or VAT errors can also result in additional VAT liabilities or penalties where the relevant conditions are met.

• Accounting software and bookkeeping for VAT records and returns.
• Professional fees for VAT advice.

• Complex transaction analysis, when you have multiple cryptoassets or revenue streams.
• International VAT advice when customers or services are outside the UK.
• Late registration or VAT error penalties.

Can You Register for VAT for Free and Switch Later?

Yes, you can register for VAT yourself and appoint an accountant later. However, if you receive professional advice from the start, it may help you provide accurate registration details and choose the appropriate VAT accounting scheme.

Moreover, accountants can help you avoid errors that may require correction later. VAT schemes can generally be changed later if you meet the relevant eligibility and HMRC requirements. Therefore, choosing one at registration is not necessarily permanent.

Final Thoughts

To sum up, the VAT registration costs for crypto businesses are zero, but professional fees may apply for VAT advice, registration support, and ongoing compliance.

The key thing you need to do is to determine whether your crypto activities make taxable supplies that count towards the VAT registration threshold.

Getting VAT registration right can help you start your VAT obligations with the correct setup. So, review your taxable turnover, keep accurate records, and seek appropriate VAT advice when your activities are complex.

AccountingFirms help you find the right accountant for your business who can assess your VAT registration requirements and complete your VAT registration accurately and on time.

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Disclaimer: The information provided on AccountingFirms.co.uk is for informational purposes only and should not be considered as financial advice. Always consult with a professional accountant to ensure compliance with UK laws and regulations.