Best to not VAT registered

[renton84uk]

Hi,

We are starting an online homeware shop selling to end customers who are unlikely to be VAT registered. We don't expect our turnout to be over 70k for the first year.

We will be buying stock mainly from within the EU and some from outside the eu.

As far as we can see, as our setup costs are relatively low and most investment will be on stock, we will be much better off if you don't register for VAT until we need to. Is this the common consensus?

The only downside I can see is that we will be spending more on stock to start with as it will include VAT (possible higher VAT rate when bought from outside the UK), but we obviously save more by not paying 17.5% (or maybe 20% soon) of the sale price of our orders.

Another download is we may not appear as professional as we would if we had a VAT number.

I would appreciate it if people could leave reasons for or against registering at this point in our business.

Also, I take it that if we are not registered, our invoices to our customers can not mention the vat within their orders?

Thanks
Renton

[MyAccountantOnline]

Hello Renton

I wouldnt suggest you register for VAT based on what you say. In general if you are selling to the public and can avoid registering for VAT its best to do so.


Also, I take it that if we are not registered, our invoices to our customers can not mention the vat within their orders?


Yes thats correct - you cant add VAT and dont mention VAT on your invoices.

[David Richards]

The only downside I can see is that we will be spending more on stock to start with as it will include VAT (possible higher VAT rate when bought from outside the UK), but we obviously save more by not paying 17.5% (or maybe 20% soon) of the sale price of our orders.Indeed, most European countries have a higher rate of VAT than the UK; only Cyprus, Luxembourg and (until the end of this month) Spain have standard rates of VAT that are less than 17.5%. Depending on the mix of what you buy and your margins, this difference in VAT rates may be significant.

Another download is we may not appear as professional as we would if we had a VAT number.Some businesses find that not having a VAT number can make things difficult when buying goods from Europe. Suppliers in other EC countries (especially where the VAT registration limits may be much lower than the UK) may expect their business customers to have a VAT number. I've heard of many instances where no VAT number = no sale. So building up a good relationship with your suppliers will help.

Also, I take it that if we are not registered, our invoices to our customers can not mention the vat within their orders?Correct.