[{"id":"dbba37a4-9667-4df7-a45f-65ed34f39ab4","cells":[{"id":"21cf5c1b-ec66-461e-b09c-c749e799dea9","inline":null,"size":12,"layout":{"plugin":{"name":"peracto/layout/container","version":"1.0.0"},"state":{}},"rows":[{"id":"0c756364-0b9d-4922-88ff-692133198944","cells":[{"id":"7c0da84d-0dc5-46ea-b526-7fa692c12c7e","inline":null,"size":12,"content":{"plugin":{"name":"peracto/content/text","version":"1.0.0"},"state":{"text":"

Registering for VAT is a decision that small business owners with sales of less than £85,000 per annum can consider. While VAT registration isn't compulsory, many businesses choose to do so.

Those who decide to become voluntarily VAT registered will also need to comply with HMRC’s Making Tax Digital initiative from April 2022 onwards. Understanding this initiative and all the responsibilities of being VAT registered is vital. You can get more information about voluntary VAT registration here.

In this article, Benjamin Dyer, CEO of Powered Now, explains the pros and cons of voluntary VAT registration.

Small businesses can give the appearance of being bigger and more established

Choosing to register for VAT can help your business appear more legitimate and larger. It can also help improve the image of your business.

Customers will automatically assume that your business is larger and more successful if you're VAT registered. You can display your VAT number on your website and invoices to help increase your credibility.

VAT can be reclaimed on most goods or services purchased from other businesses

You'll be able to reclaim any VAT you've already paid on goods and services from other companies. If you're a small, sole-trader or limited company, it is recommended to register for VAT.

You can claim back VAT on your purchases if your business is VAT-registered, but if you don't have a VAT registration, you'll need to pay the full amount to HMRC.

You can backdate a registration by up to 4 years before the date of the application

A business with a low turnover might want to consider voluntary VAT registration because it allows it to backdate the registration if needed. You can backdate a registration by up to 4 years before the date of the application.

In conclusion

Getting VAT registered can be beneficial for businesses.

A business will benefit if it charges VAT on certain goods and services, but it will also be subject to additional paperwork. Further, if you run a service or a business that provides services to other businesses, you can claim VAT on all purchases made.

Voluntary VAT registration will help your business gain recognition from other businesses and clients. It will also set the tone for expansion and success. It will also help you earn the respect of other businesses.

Without VAT registration, your business will have to pay more to HMRC, and it may cost you more in the long run. And if you're not registered, you'll have to charge more for your products and services, which can be costly.

If you are considering registering your business, it’s a good idea to hire a professional accountant to help you complete the necessary paperwork. Have you tried Powered Now? Powered Now is an affordable and easy to use app that lets you run your trade business on the go. And the good news? It fully supports MTD for VAT. Book a free demo to find out more.

About the author

Benjamin Dyer is CEO and co-founder of Powered Now. Powered Now’s mobile app aims to take the pain out of paperwork for plumbers, electricians, builders and other trade businesses.

"}}}]}]}]}]

Voluntary VAT Registration - what you need to know