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There are many businesses that opt for a voluntary VAT registration and there are benefits of doing so, here’s why.

HMRC Voluntary VAT Registration

You can opt to register for VAT even if you are below the VAT registration threshold (£85,000 for 2017/2018) and many businesses do opt to do so.

The Benefits of Voluntary VAT Registration

  • It will give the impression that your business has a turnover of more than £85,000 making you appear larger to your competitors;
  • You can claim back VAT on your purchases, regardless of your sales, helping to reduce costs while you get your business off the ground (generating tax refunds);
  • You can claim back historic VAT for example, on purchases made for setting up your business (How Far Back Can You Claim VAT?>>)

The Disadvantages of Voluntary VAT Registrations

  • HMRC can ask for information before releasing any tax refunds;
  • If your customers are individuals who cannot claim back VAT a voluntary VAT registration will mean you need to 20% more which may make you uncompetitive.  Or if you are unable to raise your price you will need to pay VAT from what you sell which will impact your profit margin;
  • You will need to keep detailed books and submit VAT returns so you may not feel ready to deal with this level of administration.


Should I Register my Business for VAT?

VAT Limits 2017/2018