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2007 VAT Registration Figures Released
Estimates of the number of enterprises registering and de-registering for VAT in 2007 have been published by the Department for Business, Enterprise and Regulatory Reform (BERR) and are now released on Nomis. At the same time, figures for earlier years have been revised.
A guidance note, which gives details of the methodology and the revisions, is available from the BERR website using the link below.
For the convenience of online presentation, the stocks variable on Nomis is described as "stock at end of year" rather than "stock at start of year" as in the official publication. This is a purely presentational difference, and has no effect on the data. So, the new data contains registrations and deregistrations for 2007 along with stocks at the end of 2007 / start of 2008. The end/start of year refers to the calendar year (i.e. 31 Dec/1 Jan).
This will be the final time these statistics are released. The Office for National Statistics have released a new National Statistics series on business births, deaths and survival rates, and from next year this will be the only official source of information on business start-ups and closures. Details of this are available at:
ONS Business Demography Statistics (link)
The following report gives further details on the differences between the two publications:
Key results
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The stock of VAT-registered enterprises increased by 57,900 (three per cent) during 2007, to reach 2.03 million at the start of 2008. There has been an increase in the stock of VAT-registered enterprises in every year since 1995, resulting in a 26 percent rise in the number of VAT registered businesses between the start of 1995 and the start of 2008.
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In 2007, there were 205,700 new registrations - an increase of 13 percent on 2006 levels, and the highest number recorded since the series began in 19941. There were 147,800 de-registrations in 2007 - an increase of two per cent on 2006 levels.
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All regions and countries, and all but two major industrial sectors (agriculture and manufacturing), saw an increase in the stock of VAT- registered enterprises in 2007. All regions and countries and most industrial sectors saw an increase in the number of VAT registrations compared with 2006, and most regions, countries and industrial sectors saw an increase in the number of de-registrations.
Background notes
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VAT registrations and de-registrations are the best official guide to the pattern of business start-ups and closures. They are an indicator of the level of entrepreneurship and of the health of the business population. As such they are used widely in regional and local economic planning.
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These figures do not, however, give the complete picture of start-up and closure activity in the economy. Some VAT exempt sectors and businesses operating below the threshold for VAT registration are not covered. At the start of 2008, the VAT threshold was an annual turnover of £67,000. At the start of 2007, 2.0 million of the estimated 4.7 million enterprises in the UK were VAT-registered.
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However, some businesses do voluntarily register for VAT even though their turnover is below the threshold. Data for 2007 shows that around a fifth of all registrations have turnover below the VAT threshold.
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To make the figures as comparable as possible over time, a number of adjustments are made. The registration figures for recent years are increased slightly to allow for the small number of registrations that take more than a few months to be reported. Similarly, the de-registration figures are decreased slightly to take account of dormant businesses which were classed as de-registered, but that have subsequently been found to be active again.
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Many factors influence the pattern of business start-ups. Among the most important are economic growth (encouraging new ventures and creating demand for business and personal services), the level of industrial restructuring and contracting out, and the stock of people with management or small business experience.
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The source of these figures is the Inter-Departmental Business Register (IDBR). It contains records of all businesses registered for VAT. The IDBR is administered by the Office for National Statistics (ONS).
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Some VAT-registered enterprises are excluded from the series, since details of their location or date of de-registration are not known. This is to avoid misleading comparisons of data. More detail is available in the accompanying guidance note on the BERR website.
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The registrations estimates released show that in 2007 there were the highest number of registrations in the period covered by the series (206 thousand). It is likely that these figures partly reflect the impact of changes of the tax rules in April 2007 surrounding Managed Service Companies (see http://www.hmrc.gov.uk/employment-status/msc.htm for more details) where businesses registered as Managed Service Companies at one address (and excluded from our series – see paragraph 9 i in the Guidance note) de-registered and re-registered as single entities elsewhere.
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A new Structural Business Statistics Regulation has been introduced by Eurostat, which requires the ONS to produce statistics on business births, deaths and survival rates. These statistics are produced using definitions and methodology determined by Eurostat, which will ensure greater comparability across the EU. They are available at:
http://www.ons.gov.uk/ons/rel/bus-register/business-demography/2009/index.html - To ensure a single methodology and source for users, this year will see the final publication of ‘Business start-ups and closures: Vat registrations and de-registrations in the UK’. In future users will be directed to the ONS statistics for information on business start-up and closures. More information on the differences between the methodology and statistics are given at http://stats.berr.gov.uk/UKSA/ed/sa20081128.htm and will also be published in the December 2008 issue of Economic and Labour Market Review.
For enquiries about these statistics and planned changes, contact the BERR Enterprise Directorate Analytical Unit:
tel: 0114 279 4439
email: enterprise.statistics@berr.gsi.gov.uk