Should your business register for VAT before you need to?

Is it time for your business to register for VAT? In the UK, if your VAT taxable turnover exceeds the current threshold of £85,000, you are legally required to pay VAT.

However, there are a number of small businesses with a turnover of less than the VAT registration threshold that opt on a voluntary basis to become VAT registered, even when they are not obliged to do so.

But should your business register for VAT before you need to? We’ve created a helpful guide outlining everything that you need to consider.


First and foremost, what is VAT?

Value Added Tax (VAT) is charged on the vast majority of goods and services provided by VAT-registered businesses throughout the UK, and it also applies to some goods and services that are imported into the UK from the EU. Businesses that are VAT registered add VAT to the sale price of goods and services they sell and businesses can also reclaim VAT paid on the goods and services they buy.


What is voluntary VAT registration?

There are a number of small businesses with a turnover of less than £85,000 that choose to

VAT registered on a voluntary basis. But why? There are a number of benefits that come hand in hand with voluntary VAT registration including the following:

  • VAT can be reclaimed on most goods or services purchased from other businesses and if your customers are VAT registered businesses they will be able to reclaim the VAT from HMRC.
  • You can recover VAT on costs
  • You will look bigger and more established to customers, investors, lenders and suppliers
  • As a VAT-registered businesses you will be provided with a VAT number which can be displayed on invoices, letterheads, websites
  • VAT registration will mean you will have to keep more accurate records which can help you optimise the day to day running of your business


But what are the disadvantages of voluntary VAT registration?

Although there are a number of benefits of voluntary VAT registration, there are also a number of disadvantages too which you must weigh up including:

  • You could end up with a large VAT bill from HMRC if your business has generated more VAT from goods and services sold than the VAT paid on goods and services bought from other businesses
  • Being VAT registered means more paperwork and administration to contend with.
  • You will need to keep all VAT invoices and receipts, maintain VAT accounting records, and file VAT returns every quarter


How to register for VAT?

If you do decide that you want to register your company for VAT, the application can be completed online at GOV.UK.


Why React Accountancy?

Here at React Accountancy, we provide trusted accountancy and tax planning services to start-up, established and multi-national businesses across a diverse range of industries.

From the moment you get in touch, our approachable, friendly and professional team will go above and beyond to ensure that you receive the right advice, support and accountancy solutions for your business.

All of our team has years of experience in providing accountancy and management services that support your business including complex financial issues.

Get in touch today for further information about any of our services.

You can reach us on 01914324110 or contact us via email using


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