Friday, 26 July 2013

To VAT or not to VAT...?

To VAT or not to VAT? That is the question.

VAT registration is compulsory with a turnover of £79,000 or more. Although you can register, should you choose to do so, at any stage, whatever your turnover. Obviously the HMRC want you to be registered for VAT as it provides revenue for the government.

Many avoid it as much as possible as they feel it is complicated and it is a complication they can do without. But it is not if you look after your paperwork. And it can boost your income. The only concern as I see it is whether you customer base is predominately 'Joe public'. Then they may resent this 20% added to the labour charge on the bill. (It is there anyway on the cost of materials)

Where your customer is predominately commercial or Industrial then they would, very likely, prefer you be registered for VAT. They can then claim back the VAT on the materials purchased as well as any labour charge.

Arguably your business would look more professional if registered for VAT.