You are obliged to register your company for VAT only if your turnover exceeds a certain limit in a full year. However, there are benefits to being registered on a voluntary basis if your turnover is below this limit.

You are obliged to register for VAT only if your income exceeds a certain limit in a full year. However, if your income is below this limit you may still register for VAT on a voluntary basis, as it may be beneficial to do so and can appear more professional to potential clients.

What are the benefits of being registered?

If you are registered for the standard scheme you can recover any VAT that has been charged to you. There is an alternative scheme called the Flat Rate Scheme which, prior to April 2017, produced an even higher recovery of VAT. However, HMRC have introduced a new category for limited cost traders, which means that in most cases the flat rate scheme no longer produces a better financial return than the standard scheme (although it does still have the advantage of being simple to operate).

Apart from the financial benefits, being registered for VAT can help promote your business, presenting an image of a large, professional and well established organisation.

If you would like further information on VAT, our team can advise on this.

Are there any reasons why I should not register for VAT?

If the majority of your clients are not registered for VAT or you work mainly abroad, and your company income does not exceed the annual limit, you might choose not to register the company for VAT.

Read: VAT Explained.