understanding VAT

[s2ooz]

Ok can someone explain charging VAT please? Im not registered, but considering it, but it looks like it will cost me money! consider this sum (fictitous figures)

PRODUCT A from supplier : £15.00 + VAT = £17.62
sell to public £25.00, I make £7.38 profit.

VAT registered

A = £15.00 as £2.62 gets claimed back from the VATMan
sell for £21.35+VAT= £25.00 (to get same price to consumer), but need to send the VATMan £3.65
profit = £6.35 !!!

So it seems I make a pound less when registered!!

is this right? Or should I be selling it at £23.50 in order to undercut the VAT company competitors?

[s2ooz]

PetrolTed said: the bottom line is that you are paying a tax on your turnover. As long as you're making money so are Customs and Excise. There are some advantages to being VAT registed but ultimately it costs you money.

I see. Thanks all. I have no "furniture" or other such costs, so I think I will stay unregistered as long as poss. which leads to Q2: whats the limit? and is that profit or turnover limit?