VAT

3. Should You Register?

The advantage of registering is that you can claim back VAT on business purchases. But if you add 17.5 per cent VAT to your prices, you may lose customers.

3.1 You must notify HM Revenue & Customs, within 30 days of the end of the month, if your taxable sales in the last 12 months exceed £64,000.

• Exceptionally, if you expect sales to fall back below this level, you can ask HM Revenue & Customs to let you remain unregistered. Otherwise, you will be registered immediately.
• You must also register if your sales during the next 30 days are expected to exceed £64,000 - eg if you set up a new company with customers ready to place orders totalling £64,000 or more.

3.2 You can opt to register for VAT if your sales are below the registration level. It should be worth registering (to claim back VAT on purchases) if:

• You make zero-rated supplies - because your customers will not have to pay VAT.
• Your customers are themselves VAT-registered - because they may be able to claim back VAT you charge them.

3.3 Start-up businesses may register before they begin trading, in order to reclaim VAT on their pre-trading business expenses.

• You have to give HM Revenue & Customs evidence of your intention to start trading.