Should I register for VAT?
- Thread starter jpchenot
- Start date
What level of turnover do you anticipate, what goods are you selling and where are you selling them?
If your company is VAT registered you will generally have to charge VAT on sales too.
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As GLA says it is dependant on whether you have taxable trade and whether it will adversely effect your longer term profitability due to your customer base.
It is also worth considering that if you register at a later date, you still claim back VAT on equipment still in use and general services that are no attributable to pre registration income generation, (both subject to certain time constraints).
Therefore keeping good records is advisable to make this retrospective review easier.
It is also worth considering that if you register at a later date, you still claim back VAT on equipment still in use and general services that are no attributable to pre registration income generation, (both subject to certain time constraints).
Therefore keeping good records is advisable to make this retrospective review easier.
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I wouldn't register for vat until you near the threshold and then speak to a good accountant about the right scheme. Why? It's added work, added cost and makes your prices immediately more expensive for a buyer.
I was advised by an idiotic accountant to register my first start-up for VAT as it gave the impression we 'were bigger than we were'. There was no need. It was BS too - everybody knew we were a small start up! It was unnecessary burden that had no value to our day to day business.
As others have said, you can retrospectively claim for vat paid on goods or services over a period so just keep a decent record and see where your turnover heads over the coming year.
I was advised by an idiotic accountant to register my first start-up for VAT as it gave the impression we 'were bigger than we were'. There was no need. It was BS too - everybody knew we were a small start up! It was unnecessary burden that had no value to our day to day business.
As others have said, you can retrospectively claim for vat paid on goods or services over a period so just keep a decent record and see where your turnover heads over the coming year.
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As if by magic this little article lurking underneath the forum... https://www.ukbusinessforums.co.uk/articles/compact-by-design-riding-the-vat-threshold.936/
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Not sure I agree. Once you get established, you up your rates and add vat! Of course, might be different for product but in services...
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It negates the initial saving that a client would have and therefore makes you less competitive to begin with.
It the market was there, retain your marked up price and then add VAT when you need to. It's all a balance. Often start-ups are normally more fee conscience so charge less in an hourly rate but once settled and able, start charging the market rate. I would certainly never absorb a VAT rate hit - it is after all, nothing to do with pricing or your business turnover, it's a share for the Gov.
Of course, if you're able to charge market rate (or more) to start with, then great. But I would argue you still shouldn't deduct and unavoidable tax for HMRC
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Depends on the scheme they are on, yes. Or and end user/ joe public.
Still, why drop your fees because of VAT?
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I never understand these posts - surely you look at your business model and do two versions of your projected income - one registered and one not and used the results to enable your decision. We can't answer them - ever. For me, VAT registration works for me. My colleague does broadly the same kinds of things and is desparately trying to keep under the limit because for him, it will be a negative.
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I think that's pretty obvious isn't it? A forum is a opinion on a matter, not solid advice based on having all the facts and on seeing for oneself the situation the op is facing. Isn't it about offering a range of views and helping the op make their own decision...?!
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If you sell unregistered for £12 and register for vat then you will need to pay £2 of that to HMRC as output VAT. 2/12 != 20%
Furthermore if you bought for, say, £6 from a vat registered supplier then. £1 of that is input VAT which offsets the output tax.
Your total hit in this example is £1. Again, 1/12 != 20%
You need to work out the effect in your particular situation.
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I don't understand.
From https://www.gov.uk/vat-businesses/inclusive-exclusive-prices
So if unregistered price is £12, then with VAT on top works out at £14.40, i.e. 20% of £12?
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And that's the reason you need to either do a couple of forecasts to see what is the best course of action for you or, (very much more recommended) ...
Talk to an accountant. Preferably someone who specialises in VAT, because the above is only applicable on the standard VAT scheme and not for other methods.
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The real answer is talk to your accountant. They will be able to work out if it is financially beneficial to be VAT registered or not.
For example, if you were a bookseller, where all your sales are zero rated, then it is vastly to your benefit to be registered. Also if all your customers are VAT registered then they can claim back the VAT that you charge, so it does not affect them. Indeed it would be better for you to be registered in that case as you can claim back VAT on your costs and thus be more competitive.
For example, if you were a bookseller, where all your sales are zero rated, then it is vastly to your benefit to be registered. Also if all your customers are VAT registered then they can claim back the VAT that you charge, so it does not affect them. Indeed it would be better for you to be registered in that case as you can claim back VAT on your costs and thus be more competitive.
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