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  • Catherine Stork

Should I Register for VAT Voluntarily?

For many business owners, understanding Value Added Tax (VAT) can be the cause of many headache-filled hours. Value Added Tax is a sales tax charged on the value of goods or services supplied to a business' customers. Legally, you must register for VAT if your taxable VAT turnover is greater than the threshold of £85,000. However, to complicate things further, businesses under this limit can voluntarily register for it. In this blog, we'll dig a little deeper into the situations in which this might be a good move for your business.

Looking to find out more about the basics of VAT and learn more about compulsory registration? Check out this blog post.

At first glance, it might seem like a strange notion that businesses under the VAT threshold might want to register to pay for VAT. It's certainly not for everyone but there can be several benefits to sign up. Before leaping into the decision, we recommend consulting your accountant. If you're in the early stages of considering a voluntary registration, take a look at our top two reasons below:

Interested in reclaiming VAT?

VAT is charged on the goods or services you produce, this is known as output tax. However, you can also reclaim VAT you pay on goods or services which is your input tax. As long as your input exceeds the output you'll be able to reclaim the difference from HMRC. So if you find your business is paying more VAT to suppliers than you would collect from customers, it might be worth further investigating a voluntary registration.

Want to build good impressions with clients?

As the VAT taxable threshold is £85,000, signing up to pay VAT can create an illusion for your clients that you are making more money than you are. Customers will know that your turnover must be lower than the threshold if you don't charge VAT. To increase standing among competitors, some businesses opt to register for VAT to build the impression of a larger company. This can be especially beneficial for new businesses who want to appear as busy and 'big' - or businesses who deal with larger companies who might turn away smaller businesses.

It might not always be a good choice

There are several reasons why it might not be a wise decision to voluntary register for VAT. It can result in more paperwork and can be costly for both yourself and potentially your customers. Find out more about the time when voluntarily registering isn't a good idea here.

Can I change my mind?

If you later wish to de-register for VAT, this is possible as long as your business is still under the threshold.


If you would like to chat in more detail about your unique circumstances, please get in touch today to book your FREE initial consultation. Give Catherine a call on 01423 431889 or email

Please note: all stats are accurate for the 2022/23 tax year.

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