Registering for VAT as a micro business

[ddrys]

I'm in the process of researching my start-up, but one thing I'm not sure on is VAT. I know the threshold for compulsory registration for VAT is £85,000 turnover per year, and I don't anticipate my business will manage anywhere near that in its first year.

However, it's a service based business aiming for commercial clients, 99.9% of whom will claim a portion of VAT back.

• If I am not registered for VAT (due to being a micro company <£85k), will that likely harm the appeal of my business with commercial clients?
• In my situation, would it be better to register for VAT so that I can invoice clients with VAT for their benefit?

Thanks

 

[JamesCartwright]

Hi ddrys,


If you are dealing with commercial clients it might indeed be better for your business to be VAT registered.

Firstly, your business will give the appearance of being bigger and more established. This will, as you have mentioned, give "appeal" to other business who will assume your business turns over more than 85k. Most importantly, being VAT registered can facilitate your business to business relationship as many companies are often reluctant to trade with businesses who are not VAT Registered.

If you are scared that your commercial client will only trade with VAT Registered company then it might be better for you to register.

However, you must remember that being VAT Registered requires you to submit quarterly VAT Returns and charge VAT on almost any kind of sale you may make. Extra paperwork is thus unavoidable.

If you have more questions do not hesitate to send me a message. I’ve helped many customers register for VAT.

-JC

 

[Onion4Sage]

If it makes no difference to your clients whether they are charged VAT (because 99.9% of them can recover it), it could actually make a difference to you in that you'd be able to recover VAT on supplies to your business. Additionally, one of the flat rate schemes could mitigate the amount of overhead you experience as a result of being VAT registered.

Regards,

Ian

 

[Andri]

Just to stress the added paperwork , deadlines involved and also the importance of keeping accurate records overall especiall the vat