What are the Benefits of registering for VAT voluntarily?
Discussion
if you are going to be invoicing other businesses who are vat registered then it makes sense to register yourself voluntarily, since you will not be losing the VAT on your sales, but you can claim it back on your expenses 9those which have VAT on them). If you sell mainly to individuals or companies that are not VAT registered then I would reccomend waiting until you break the £60k mark, because you then lose th 17.5% on all your sales. Unless of course you plan to spend more than you receive, but that probably wouldn't be good for your bank balance!
The other scenario where registering voluntarily might be worth considering would be where you have a large content of Zero Rated sales. This depends on the nature of the work you do and the type of services/goods sold. This only applies to certain restricted activities.
Please note that the situation is very different regarding "VAT Exempt" supplies.
Please note that the situation is very different regarding "VAT Exempt" supplies.
Im on the flat rate scheme.
Charge customer £100
Bill customer for £117.50
But I only have to pay customs and Excise 13% of the £117.50, so get to keep a little of the vat money myself
Works for me, as I dont buy products/supplies etc which are subject to vat.
Downside is I cant claim any vat back, but I also dont have to prepare a load of vat reports every 3 months for my accountant either.
Id register when you have to. Keep prices as they would normally be, and enjoy the extra 17% profit while it lasts.
Charge customer £100
Bill customer for £117.50
But I only have to pay customs and Excise 13% of the £117.50, so get to keep a little of the vat money myself
Works for me, as I dont buy products/supplies etc which are subject to vat. Downside is I cant claim any vat back, but I also dont have to prepare a load of vat reports every 3 months for my accountant either.
Id register when you have to. Keep prices as they would normally be, and enjoy the extra 17% profit while it lasts.
UKBob said:
Im on the flat rate scheme.
Charge customer £100
Bill customer for £117.50
But I only have to pay customs and Excise 13% of the £117.50, so get to keep a little of the vat money myself Works for me, as I dont buy products/supplies etc which are subject to vat.
Downside is I cant claim any vat back, but I also dont have to prepare a load of vat reports every 3 months for my accountant either.
Charge customer £100
Bill customer for £117.50
But I only have to pay customs and Excise 13% of the £117.50, so get to keep a little of the vat money myself
Works for me, as I dont buy products/supplies etc which are subject to vat. Downside is I cant claim any vat back, but I also dont have to prepare a load of vat reports every 3 months for my accountant either.
Not sure I follow you there to be honest. Something like Quickbooks will do your VAT return in seconds, so its hardly a chore.
tinman0 said:
UKBob said:
Im on the flat rate scheme.
Charge customer £100
Bill customer for £117.50
But I only have to pay customs and Excise 13% of the £117.50, so get to keep a little of the vat money myself Works for me, as I dont buy products/supplies etc which are subject to vat.
Downside is I cant claim any vat back, but I also dont have to prepare a load of vat reports every 3 months for my accountant either.
Charge customer £100
Bill customer for £117.50
But I only have to pay customs and Excise 13% of the £117.50, so get to keep a little of the vat money myself
Works for me, as I dont buy products/supplies etc which are subject to vat. Downside is I cant claim any vat back, but I also dont have to prepare a load of vat reports every 3 months for my accountant either.
Not sure I follow you there to be honest. Something like Quickbooks will do your VAT return in seconds, so its hardly a chore.
Being on the flat rate scheme simply means that you only pay the government 13% of the total amount you charge the customer.
I have quickbooks, things are just a little simpler without having to worry about vat.
The brother has been in business quite a number of years and he found the conversion from non-vat registered to registered took him a couple of years until he was able to pay all his bills immediately without any worry and having to juggle the finances. Losing 17.5% of turnover at the VAT threshold can cause cashflow problems and cashflow problems is the No.1 cause of business failure, much more so than a lack of profitability.
Taking the hit now, may make business expansion a little less painful, but its worthwhile consulting a good accountant and talking it through with them.
Taking the hit now, may make business expansion a little less painful, but its worthwhile consulting a good accountant and talking it through with them.
PetrolTed said:
Eric Mc said:
If I was the chancellor, I'd abolish the threshold, make all traders register and reduce the VAT rate to 5% on EVERYTHING.
I notice in my latest VAT leaflet that they've reduce VAT on condoms to 5%...
But for those men blessed with 12" or more they are going to reintroduce the 'pole' tax.
Oh dear, bed time I think...
State taxes in the US are often collected through various forms of "sales" taxes. When I was in the US in 1984, retail prices for most goods and services in New York were higher than in neighbouring New Jersey - because New York levied a Sales Tax and New Jersey didn't. I don't know if that is still the case.
I think Canada has a form of VAT.
I think Canada has a form of VAT.
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