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    1. Skipper is offline

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      #1

      What are the benefits of registering for VAT? Should I do it?

      I have been doing really well with my sells this year and am wondering if I need to register for the Vat. There seems to be a lot of debate on whether or not the VAT is a help or hindrance.

      Really I dont want to give my money away to the tax man but if it helps the business then Im for it. Plus I dont want to do anything that is against the law so if I need to be giving the VAT man my money then I guess thats what Im going to have to do.

      Whats the word? Is it good to have a VAT number or is it just too much trouble?
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    2. camguy is offline

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      #2
      Only register with VAT if you have to. This is my personal feeling, but I know I’m not alone in thinking that the VAT is more of a headache than relief. Right now if you make 70,000 in a 12 month period then you MUST register. However, if you don’t then it’s probably in your best interest not to.

      This is how it works: You have to give the HMRC the VAT you’ve collected minus the VAT you’ve paid out. It looks complicated but basically you keep track of the Output VAT you pay to other businesses (who you buy products or services from) then you subtract the amount you paid out (input VAT) and that’s what you send.

      You have to add the appropriated rate – which is 17.5 percent but is going up to 20 percent this coming January – to all your sales. This means you make more when you don’t have to deal with the VAT issue.

      Ultimately it is a person to person (Business to business) decision. It might meet your needs to register. Take a look at this site, they have a calculator you can use to see if the VAT works.

      Register for VAT
      Over 150,000 Verified Sources + Deals 95% Off MSRP + Free Website!

    3. Skipper is offline

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      #3
      Thanks for the link! Does it make me look more professional if I have a VAT number?

    4. SallySoup123 is offline

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      #4
      If you bringing in 70,000 in a year then you have to register. Only register when you are required to otherwise it’s just a rip off. All you are doing is working as a tax collector and not getting paid for it. Let the VAT Tax Man do the work.

    5. camguy is offline

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      #5
      Its 70,000 now some businesses want to do business strictly with VAT users. Maybe it makes it easier for them, I’m not sure. However, there is a sense of credibility when you are a registered with VAT. It can make a small business look like a big businesses.

    6. Iucounu is offline

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      #6
      Any money you earn while collecting VAT isn’t money earned. You are working for free so you can send VAT money. Look at it this way.

      Vat registered user:

      cost price 5 plus VAT =5.70
      Sale price including VAT 10
      gross profit 3.51

      Non registered person:

      cost price 5 plus VAT = 5.70
      Sale price 10
      gross profit 4.40

      That’s a difference of 0.79. That might not seem like much but it adds up. And that’s money that you don’t get but just have to send over to the tax man. My feeling is it’s better to cap your trades if you are close to the borderline (70,000) rather than work as a tax collector for free.

    7. NeilG is offline

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      #7
      Numbers make my head swim. Here’s how it is:

      • You pay VAT on what you buy (this means stocks, business accessories, assets).
      • You collect VAT on what you sell.
      • The difference between the two (cost – sale price) is what you send to the VAT guy.

      Unregistered users get to keep their prices lower while we registered users have to factor the VAT into our price somehow in order to stay competitive.

    8. SallySoup123 is offline

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      #8
      Oops, thanks for the correction. I keep forgetting that the amount has gone up. It was just 64,000 not too long ago. One point that should be brought up is that this isn’t just a UK issue. Countries in the EU that do business with UK companies/persons have to comply with VAT as well.

    9. camguy is offline

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      #9
      No problem. The amount is going up. I have to remember that it won’t be 17.5 % anymore starting Jan. 4, 2011. Things go up and up, while we try to keep prices down. Thanks HRMC.

    10. Skipper is offline

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      #10
      If it is such a hassle then why do people register when they don’t make the required amount? All of this seems like extra work to me and I don’t really want to do that much extra work.

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