Do I charge VAT?

[Tipzy]

I run an online business and I am due to send out our first invoice to a client.

Do we charge VAT or not?

We are no where near the UK VAT threshold, but may go over it in the next few months.

We are not VAT registered, so I am keen to know what we can do. If it makes us look larger I would be happy to register for VAT and begin charging the VAT on top.

Thanks for your time.

 

[Jeremiah@RHJ Accountants]

You cannot charge VAT unless you are VAT registered.

Now if being VAT registered will benefit you depends on a number of factors best discussed with you accountant or if you do not have one i would suggest this is top priority.

Maybe look at the Flat rate scheme of VAT.

 

[paulears]

Are your clients consumers? If they are, then registering for VAT would simply make you 20% more expensive. If your clients are businesses, then VAT doesn't become a problem. You quote £1000, and then add £200 VAT, which they pay you. You then give it to the HMRC. If you are going to get close to the barrier - I'd have a quick chat with an accountant - because their advice will be very handy.

 

[TheCyclingProgrammer]

Definitely worth considering the flat rate scheme for VAT if you're customers are businesses but do speak to your accountant as whether you would benefit depends on your level of expenses.

This would help cover the costs of any input VAT you currently pay on expenses.