Ever asked about a Taxpayer Identification Number and feel confused as a business owner? You are not alone!
In this article, we will talk about what a TIN Number is, how you can find it, its purpose and functions, and the process to obtain it.
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What Is a TIN Number?
A Tax Identification Number (TIN) is a generic term for a unique number that governments and tax authorities use to identify and track taxpayers. While widely used internationally, the UK does not have a single official “TIN”. Instead, His Majesty’s Revenue and Customs (HMRC) uses several different numbers for tax purposes, depending on whether you are an individual or a business.
How To Find My TIN?
In the UK, there is no single TIN, instead the specific number you need depends on your circumstances. For the international requests for TIN, you should provide your National Insurance Number or the Unique Taxpayer Reference (UTR).
For Individuals
For individuals, your National Insurance Number is required for your personal tax and benefits. It can be found on:
- Your payslips or P60s
- Your official letters about tax, pensions, or benefits from HMRC
- Online through your Personal Tax Account or HMRC app.
Self-employed individuals need a UTR, a 10-digit number used for Self Assessment tax returns. It can be found in:
- Your previous Self Assessment tax returns.
- HMRC letters
- Online through your Personal Tax Account or the HMRC app.
For Businesses
- Limited companies and partnerships are issued a UTR for Corporation Tax. It can be found on official HMRC correspondence, including the notices to file a tax return.
- You are also issued a CRN (Company Registration Number), It is an 8-digit number issued by Companies House when you register your company. It can be found on your incorporation certificate or by searching for your company on the Companies House website.
- If you have employees working for you, then you will have an Employer PAYE Reference. It can be found in correspondence from HMRC about your payroll, like letters and P60s.
- If you are a VAT-registered business, your VAT registration number serves a similar purpose to a TIN for VAT-related transactions
Why Do You Need a TIN Number?
TIN is a unique identifier assigned by the government to track individuals and entities for tax administration. Various tax identifiers serve the same purpose for different types of taxpayers.
Core Purposes of a TIN
- TIN acts as a unique identification for each individual and business, ensuring the tax authorities, like HMRC, can accurately distinguish between different taxpayers.
- TINs help the government ensure compliance by tracking tax obligations, such as income tax, National Insurance Contributions and Corporation Tax, to ensure everyone pays the accurate amount.
- Using the correct TIN, when submitting tax returns to the government. This helps ensure smooth and accurate tax filings.
- Ensuring a valid TIN, can help access government services, like benefits, pensions, tax reliefs and support schemes.
Functions Of UK Tax Identifiers
Since, UK does not use a single TIN, the specific function depends on the identifier being used.
For the Individuals,
- The National Insurance Number tracks an individual’s tax payments, its contributions and eligibility for state benefits.
- UTR, being used by individuals who register for Self Assessment tax returns, like sole traders or those with rental property income.
For the Businesses,
- A company UTR is issued to limited companies for Corporation Tax. A separate partnership UTR is issued to partnerships for filing the partnership’s tax return, but each partner is responsible for their own Income Tax.
- Company Registration Number (CRN) is issued by Companies House upon incorporation, it is a public-facing number that is used to identify limited companies in legal and tax matters.
- This number is assigned to the VAT-registered businesses. It is used for all VAT-related transactions and reporting.
How To Obtain a TIN Number?
In the UK, different numbers are used for tax purposes depending on your situation. For the individuals, the most commonly used are the National Insurance Number or a Unique Taxpayer Reference (UTR).
Here is how you can obtain the most common tax identifiers in UK as individuals,
- Your National Insurance Number is your unique personal number used to record your NICs and is equivalent to a TIN for individuals. It can be applied through the UK government website and you will need to prove your identity. You can find it on your payslips, P60s, or any official tax correspondence from HMRC.
- UTR is obtained when you register for Self Assessment. You will require a UTR if you are self-employed or have income that is not taxed. You can apply for it through your government website, then the HMRC will send it by post. Your UTR can be found on previous tax returns, letters from HMRC, or in your Personal Tax Account or HMRC app.
For the Businesses,
- UTR for companies is different from that of an individual. It will be obtained when you set up a limited company and register it for Corporation Tax. It can be found on previous tax returns, and other correspondence from HMRC.
- You are assigned a CRN, when you incorporate a limited company with Companies House. It can be received automatically when you register a limited company. It is printed on your Certificate on Incorporation and can be found by searching the public register on the Companies House website.
What Is the TIN Number Application Process
You can apply for an NI number if you are a UK resident who is 16 or over and has the right to work in the UK. You must either be looking for work or have a job offer.
The application process
- Check eligibility: First, ensure you meet the eligibility criteria. You may not need to apply if you were sent one before your 16th birthday or if it is printed on the back of your Biometric Residence Permit (BRP).
- Apply online: Apply for a new NI number using the official government online service.
- Prove your identity: As part of the online application, you will need to prove your identity. This may involve uploading digital photos of yourself and your identity documents, such as a passport.
- Alternative identity verification: If you are unable to verify your identity online, you may be asked to post photocopies of your documents or attend an interview.
- Receive your NI number: After your identity has been verified, you will receive your National Insurance number by post. This can take up to 16 working days.
For Unique Taxpayer Reference (UTR), the process will involve:
- Registering for Self Assessment with HMRC. It should be done as soon as you become self-employed.
- You will be required to provide your personal details, like name, date of birth, address, phone number, and National Insurance number. You will also need to provide the date you became self-employed and details about the nature of your business.
- Complete the application on the HMRC website.
- HMRC will post your UTR within 15 working days. You will receive a “Welcome to Self Assessment” letter containing your UTR.
- Once registered, you will receive a separate activation code by post. You can use this post to activate your online account within 28 days.
Validity and Authenticity Of TIN Number
“Validity” refers to whether a TIN follows the correct format, while “authenticity” confirms that the TIN genuinely belongs to the person or the business claiming it. A TIN can be valid but still not be authentic if it is not a real, issued number. The verification processes vary country by country.
- Some countries offer online portals, where taxpayers can verify their TIN through a chatbot or a dedicated portal.
- In the UK, individuals can check their National Insurance Number or UTR by accessing their personal tax accounts on the HMRC website.
- Contacting or visiting your local tax authority or tax office is an eligible method. The tax authority can verify the TIN against your personal identification and details.
Limitations OF TIN Number
TIN is a crucial identifier for tax purposes, but it comes with several limitations and challenges. These limitations affect individuals, businesses, and government bodies, particularly in validation, security, and global application.
Validation And Accuracy Issues
- This can include a data mismatch, where a TIN may fail verification if the information on account, like name or legal business name, does not exactly match what the IRS or other tax authority has on file.
- The physical collection and verification of TINs are inefficient and prone to human error, especially for organisations handling high volumes of data.
- Different tax authorities have different TIN specifications, like structure and syntax. Some have different formats for national versus foreign residents.
- In some authorities, it is a criminal offense to have more than one TIN; still, issues can occur with duplicate numbers. This could lead to penalties and rejection of transactions that require tax compliance.
Global And Jurisdictional Complexity
- TINs are not universally issued, to all individuals or entities. This can create challenges for financial institutions and other entities that require a TIN for reporting under international frameworks like CRS.
- Since an individual can carry multiple tax residences means they can be tax resident in more than one country, they can be required to provide multiple TINs.
Administrative And Systemic Challenges
- Businesses, particularly financial institutions, face a significant burden in ensuring the accuracy and validity of TINs to remain compliant with the regulatory frameworks.
- There is an extreme lack of centralised validation at the international level. Projects like the European TIN portal exist to verify the format of certain numbers, they do not confirm the identity of a person or the existence of the TIN.
Bottom Line
If you are a business owner, or an individual taxpayer, understanding the aspects and the process to obtain a TIN number is very important.
Staying compliant and informed, with legislation and policies helps ensure you are contributing to a fair and effective tax system.
Get in touch with our young, clever, and tech-driven professionals if you want to choose the solution to tax burden or accounting problems in the UK for your income. We will ensure to offer the best services.