As a business-to-consumer (B2C) company, there are some key advantages to registering early for VAT with HM Revenue & Customs (HMRC), but also some potential downsides to consider.
- You improve your professional status of the business
- You show you’re a serious business that can handle money sensibly
- You can improve your profits by making use of the different VAT schemes
But on the flipside of this, there are some negatives:
- Once registered, you’re responsible for collecting VAT and paying it to HMRC
- You have the extra admin workload and finance duties of managing your VAT return
- If you’re selling to consumers, not businesses, adding that extra 20% onto your prices can make you uncompetitive and a less attractive option to customers.
It’s also worth considering what percentage of your expenses included VAT. If the majority of your purchases include VAT then it may be worth registering to reclaim the VAT (for example, big expenses like rent etc.). But if you have a lot of non-VAT expenses (for example, raw materials etc.), there’s little to gain from registering.
If you’re unsure whether registering for VAT is the best move, give us a call on 01454 300 999, or drop an email to firstname.lastname@example.org