Should I register for VAT?

As a business owner one of the first decisions in business is not usually VAT, some may not even come across this until it’s too late. When making a VAT decision you should now consider the Making Tax Digital rules and how these will impact your business records.

Compulsory Registration

You must register for VAT if you expect your turnover within the next 30 days is going to exceed the threshold of £85,000.

Voluntary Registration

It may seem silly to voluntarily register for VAT, I mean why would you want to pay an extra tax?

Well, if you are going to voluntary register – here are some benefits:

• Registering for VAT may make your business seem bigger and more established.
  
  
• If you are selling to other VAT registered businesses/customers, adding the VAT will not make your products or services any more expensive for them – so technically you’re improving your profit margin without making your customers upset!
  
  
• Purchases your business makes will be eligible to reclaim your input VAT.
  
  
• If you make zero-rated supplies then you could quite possibly be due a repayment of VAT in each quarter.
  
  
• You can reclaim the input VAT on certain goods/services received before registration.

With everything, there are always disadvantages – here’s a few for you to think about:

• Your goods or services will be more expensive to non-VAT-registered customers.

• You will incur additional invoicing requirements; you’ll need to keep all invoices to reclaim the VAT.

• You’ll have additional costs or administration to manage such as VAT returns.

• If you make errors in respect of VAT, miss deadlines or submit returns late then you can be subject to penalties.

Registering for VAT

If you do decide to now go ahead and register for VAT, you should consider the following:

• The date you want to register from.
  
  
• What items you’d like to reclaim VAT on, as pre-registration input VAT.
  
  
• Making VAT Digital
  
  
• Which scheme you’ll be using, for example: Flat Rate scheme.
  
  
• Do not charge any VAT to customers until you’ve formally received your registration certificate and VAT number.
  
  
• Make sure you’re ready for all the extra compliance and regulations that come with registering.

We know it can be a struggle sometimes to decide what you want to do, a blog sometimes just isn’t enough. We’re always here for you – feel free to contact our team and an expert in VAT will walk you through all the tips and tricks of VAT.