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Volunteering for VAT..... Should you?

Volunteering for VAT…… Should you?

Those of you who have no choice but to register for VAT, complete the returns, deal with the paperwork and manage the deadlines will no doubt wonder about the sanity of anyone wishing to voluntarily register as - what some see as being - an unpaid tax collector.

 

But some do. Take, for example, a client who recently told me she wanted to register for VAT. She had opened a small art gallery in an annexe at her home a few months previously. Having helped her to set up her new business and followed it with interest, I knew that her takings to date were modest to say the least. Unless things changed drastically, she would not reach the taxable turnover threshold of £79,000 or more (in 2013/14).

 

However she was insistent. She explained that one of her artists had told her that if she wanted to look successful, she needed to charge VAT. Being able to quote prices plus VAT would make her customers think they were dealing with a 'proper business'.

 

In fact, my gallery-owning client is not alone. There are a number of occupations where perception is important: designers, writers, artists, architects and builders to list just a few. 

 

Do the benefits outweigh the extra work?

Do you buy mostly from suppliers who are VAT-registered themselves? Do you understand that you have to charge VAT on everything you sell, even to your friends or family or when you sell something second-hand? When you're VAT-registered, this includes your property if it's used as your business premises.

If you sell goods or services that carry VAT at different rates, for example standard-rated and zero-rated, or you sell some that are exempt from VAT, then it does become more time-consuming and may not be worth the hassle. However, there are a number of VAT accounting schemes that can reduce the administrative burden and, in some cases such as with flat-rate accounting, you may even make a small profit from doing so.

The best advice is to talk to us as, to some extent, it depends on the type of business you run.

Find out how we can help with your VAT related problems and queries by calling us on 01628 631056 or completing our contact form.