Value Added Tax (VAT) is the sales tax which is usually charged on the consumption of goods and services in the UK. The businesses with a taxable turnover of more than £81,000 must register for VAT. After your business is VAT registered, it can charge and reclaim VAT on goods and services sold to customers and purchased from other businesses respectively.
As mentioned earlier, registering for VAT is mandatory for businesses with a taxable turnover above the threshold; business can also go for a voluntary VAT registration.
Voluntarily VAT registration has many benefits for your business. Take a look at them.
Financial penalties
If you are not careful about your turnover, then you might fail to notice when it is over your VAT registration threshold. Such carelessness could result in a minor or major penalty. With voluntary registration, you do not have to worry about passing the threshold and penalties.
Business profile
Your customers are aware of VAT registration threshold. This means when you voluntarily registering your business, it might give an impression as a bigger business and successful than it already is to your customers.
Business Dealings
Many suppliers want to do business with VAT registered companies. If you aren’t registered, you won’t be able to produce a VAT invoice which gives them a solid ground not to trust your business. However, if you are voluntarily registered, you are given a VAT registration number which will help you in dealing with your suppliers and organisations.
VAT Refunds
If you have voluntary registered for VAT, it can help you to claim VAT on goods and services purchased for your business. It can further allow you to reclaim VAT from the last 4 years as long as you have correct VAT records.
Credibility
When you register voluntarily, you will get a VAT registration number. This number can be displayed on your business website and correspondence which only increases the credibility of your business. Moreover, it may also give you chances to work with other bigger firms as they are only interested in doing business with VAT registered companies.
After you are voluntarily registered, you should keep proper records, invoices and submit a VAT return in every quarter.
This registration process can be complicated at times. In such situations, specialist VAT consultants are the ones who you should run to. They can offer expert advice on these matters and suggest you on what to do next.