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Advantages/Disadvantages of Voluntanry VAT registration

Posts: 12
Joined: Wed Aug 06, 2008 3:47 pm

Advantages/Disadvantages of Voluntanry VAT registration

Postby samboston » Thu Apr 01, 2010 1:58 pm

Hi All

I'm new to business. I'm thinking of buying a closed sandwich shop (ie just the building) and then start selling sandwiches, and I expect my turnover to be less than 65,000 a year.(which I believe is the vat registration threshold)

Are there any disadvantages to voluntary VAT registration?

Also, are there any advantages to voluntary VAT registration?

Thanks again

Ben Laws
Posts: 19
Joined: Sat Jan 03, 2009 12:53 am

Re: Advantages/Disadvantages of Voluntanry VAT registration

Postby Ben Laws » Fri Apr 02, 2010 11:40 am

Hello there

The current threshold for VAT is £70,000.
see: http://www.hmrc.gov.uk/vat/start/register/when-to-register.htm

Advantages: reclaims are possible for the setup periods and low trading periods at the beginning which will allow you some positive cashflow.

Disadvantages: the minute your vatable sales exceed your vatable purchases you are paying money to HMRC.

Have you forecasted any works costs, purchase costs, sales revenue, overheads etc for the next 12 months? If so, an analysis of this will reveal which scenario would be better.

Generally speaking though, it would only be beneficial if you were spending a whopping amount on assets, refurb and other set up costs initially. i.e. The 1st quarter rebate covers the next 5 quarters payments - which tends not to be the case in food / beverage retail outlets.

If you have any further questions, please do not hesitate to contact me.

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