3 ms·

What's the advantage of being VAT registered out of curiosity?

• MattBearman 13y ago
  You claim the VAT back on all your business purchases - essentially a 20% discount :)
  • majc2 13y ago
    Also, if you don't have that much external expenditure; then you can sign up for the flat rate scheme, which for tech essentially gives your income a boost of 4% for free.
    • jiggy2011 13y ago
      But at the cost of having to raise your rates by 20% without seeing any of that.
      • ronaldx 13y ago
        Profitable corporations would see VAT as adding 0 cost, since they would otherwise have to pay the same amount directly to HMRC. It depends who your customers are.
  • martin-adams 13y ago
    You mean a 16.6% discount ;)
• martin-adams 13y ago
  Make sure that all your clients are VAT registered business, otherwise you work out 20% more expensive.
• TamDenholm 13y ago
  If you register for vat and go on the flat rate scheme you charge 20% and only have to pay 14.5% to the vat man. If you charge £50 an hour, you get an extra £110 a week for simply being registered. Also, it makes you look like youre big enough that you need to be vat regged. Also you get an extra 1% in your first year.
  • cangencer 13y ago
    Flat rate is calculated on your total revenue including VAT, so for £2000/week your gains would be £52/week (£2000 * 1.20 * 0.855)
  • ronaldx 13y ago
    20% and 14.5% are not comparable percentages here: You charge 20% VAT but then you pay 14.5% of the 120% total (i.e. 17.4%). This may be a good deal if you have relatively few VATable expeneses, and you are charging customers who are insensitive to VAT (you are paying their VAT for them). At best, you're making £52pw rather than £110pw.