Should I Become VAT Registered?
May 7, 2019
May 7, 2019
Only when your business exceeds a turnover of £85,000 do you have to become VAT registered. However, some companies do decide to register for VAT before they hit this threshold. Here we explore the pros and cons.
Many companies decide to register for VAT before they hit the legal threshold, as this allows them to reclaim the VAT on company purchases. There are savings to be made on expenses such as a work laptop or mobile phone, workwear and even your daily sandwich, as the VAT you pay can be re-claimed against VAT charged to clients.
Some also see it as a mark that the business is performing well; and register for VAT to emphasise to potential customers that they are a professional operation.
For those who find admin a chore, being VAT registered when you don’t need to may not be for you. If you take the plunge you’ll need to add VAT to all your client invoices and keep all your VAT invoices and receipts for any company expenses. You’ll also have to submit a quarterly or annual VAT return.
If you’re regularly up against non-VAT registered companies when you quote for jobs, you might want to stay that way too, in order to remain competitive.
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VAT registration can be completed online via the GOV.UK’s website, or by using the paper form entitled ‘VAT1’. In order to make the application as efficient as possible, it’s important to have a number of business documents to hand before you begin:
It is possible to reverse your registration if you’re under the threshold, but it can be difficult. That’s why it’s important to consider if registration is the right move before embarking on the registration. If you’re above the £85,000 threshold then it’s impossible to reverse your registration.
For more information about VAT registration, please visit: https://www.gov.uk/vat-registration
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