VAT registration: business pros and cons...

Hi all

Could anyone tell me (simply!) what the pros and cons of VAT registration are. If I don't have to register for it, then what would be the point of doing so.

I must be simplistic but I could only see it as a disadvantage - passing an extra cost on to clients who aren't VAT registered businesses and therefore being les competitive. What am I missing?

Tim

Re : VAT registration: business pros and cons

I believe you have an obligation to register for VAT once you reach a turnover between £50 and £60,000. At that point in time, you don't have a choice anymore.
However, you can always do volontarily but as you mentioned yourself, you need to be careful and do the calculation prior to deciding. I suppose when you have VAT number, you look larger as a company but this might not be important depending on your target group.
Hope this helps.
Ingrid

Re : VAT registration: business pros and cons

Hi Tim

As Ingrid mentions, most companies are VAT registered not through choice but through necessity due to hitting the threshold level where you have to be VAT registered.

Depending on your customers this isn't usually an issue as at that level you are dealing with other companies anyhow so the VAT will just pass through the business, as it were.

Chris

Re : VAT registration: business pros and cons

My husband and I set up our business in January and went VAT registered straight away. We claimed vat back on all the equipment we had bought to set our company up from the PAST 3 YEARS - right down to stationery - post-its and sellotape. Within one week of claiming we received a cheque for over £300.

But these guys are right... it depends what business you're in.
We're a sign company - selling directly to businesses so most tend to be VAT registered - they pretty much expect to be charged VAT on top of our prices.

Re : VAT registration: business pros and cons

Thanks for the information - so basically it's a case of being able to claim VAT back versus losing competitive edge by increasing prices 17.5% and doing more stringent accounting?

Tim

Re : VAT registration: business pros and cons

If your turnover is less than £150,000 then if you have to register it maybe worthwhile looking at the Flat Rate Scheme which will cut down the admin of preparing VAT Returns and MAY reduce quarterly bills.
__________________
For efficient accounting services go to www.truemanbrown.co.uk