Getting VAT registered
Discussion
Just wondering whether it is worth getting vat registration for a very small business in order to save VAT costs on equipment and supplies ETC
My wife runs a flock of sheep on our 30 acres of land and sells the lambs for meat as well as some of the wool. As you can imagine the turnover is pitiful but the costs can be quite high especially when we're buying equipment which always has VAT added on top.
We are currently looking to buy a new sheep trailer and possibly another second hand tractor. Both have vat added to the price
Is it worth being vat registered to claim the vat back or is it a massive hassle for such a small business?
Also if we are vat registered to claim the VAT back on incoming purchases do we then have to charge VAT on the meat we sell?
My wife runs a flock of sheep on our 30 acres of land and sells the lambs for meat as well as some of the wool. As you can imagine the turnover is pitiful but the costs can be quite high especially when we're buying equipment which always has VAT added on top.
We are currently looking to buy a new sheep trailer and possibly another second hand tractor. Both have vat added to the price
Is it worth being vat registered to claim the vat back or is it a massive hassle for such a small business?
Also if we are vat registered to claim the VAT back on incoming purchases do we then have to charge VAT on the meat we sell?
In my opinion, it's not worth it.
Don't forget, if you are planning on buying some equipment and wish to reclaim the VAT on the cost of that equipment, when you eventually sell that equipment - or even just transfer it out of the business, you will have to account for the VAT on the sale price/trade-in or market value at disposal.
Don't forget, if you are planning on buying some equipment and wish to reclaim the VAT on the cost of that equipment, when you eventually sell that equipment - or even just transfer it out of the business, you will have to account for the VAT on the sale price/trade-in or market value at disposal.
Eric Mc said:
In my opinion, it's not worth it.
Don't forget, if you are planning on buying some equipment and wish to reclaim the VAT on the cost of that equipment, when you eventually sell that equipment - or even just transfer it out of the business, you will have to account for the VAT on the sale price/trade-in or market value at disposal.
But by then the value will be greatly reduced so the VAT repayable could be minimal. I'd say do it, given the amount of VAT you can reclaim could be a useful boost to your profits - you might want to work out how much VAT you might recover in a year. You'll need to keep good records of course. Don't forget, if you are planning on buying some equipment and wish to reclaim the VAT on the cost of that equipment, when you eventually sell that equipment - or even just transfer it out of the business, you will have to account for the VAT on the sale price/trade-in or market value at disposal.
First off - and completely unrelated to your question, it's lovely to hear of a business that doesn't include 'IT' or 'Property' or 'Consultancy'. May only be £5k a year but what a great way to earn it!
Don't forget that VAT is a two way thing and you may be required to charge it as well as reclaim it. If your customers are VAT registered then no issue but if they're not, you're suddenly going to be 20% more expensive to them.
A993LAD said:
Does it cost much to become vat registered?
Costs nothing - unless you are ask your accountant to register for you.A993LAD said:
Can I claim it back retrospectively? We had a big fencing bill last year.
Yes, providing the invoice was within 6 months of registration.Don't forget that VAT is a two way thing and you may be required to charge it as well as reclaim it. If your customers are VAT registered then no issue but if they're not, you're suddenly going to be 20% more expensive to them.
A993LAD said:
Is it worth being vat registered to claim the vat back or is it a massive hassle for such a small business?
Also if we are vat registered to claim the VAT back on incoming purchases do we then have to charge VAT on the meat we sell?
Yes, but if your customers are also registered they claim it back so it's irrelevant.Also if we are vat registered to claim the VAT back on incoming purchases do we then have to charge VAT on the meat we sell?
I was voluntarily registered for about 20 years and it saved me a fortune.
Eric Mc said:
The turnover is only £5,000.
I would strongly recommend NOT to VAT register at those turnover levels.
The admin hassle will be excessive. If the business expands, of course, that will be a different story.
I guess the OP needs to add up what the value of a reclaim would be and make a judgement.I would strongly recommend NOT to VAT register at those turnover levels.
The admin hassle will be excessive. If the business expands, of course, that will be a different story.
VAT was easy when I did it - two extra columns in the cashbook, and a return once a quarter. I'm sure technology has conspired to make it vastly more complex and expensive now, but that's progress eh.
Surely you'd need to charge VAT on the sales, retrospectively, to be able to offset the VAT paid on past expenses? Unless you plan to wait for more sales, which will have VAT on top, but at £5k/annum surely that will take a while before meaningful offset and you'll be past the 6mth rule on the fence?
I don't think the hassle is worth it for a £5k turnover. If your expenses are way past the income raised it sounds like a hobby rather than a business - why add pain to the mix.
I don't think the hassle is worth it for a £5k turnover. If your expenses are way past the income raised it sounds like a hobby rather than a business - why add pain to the mix.
Simpo Two said:
Eric Mc said:
The turnover is only £5,000.
I would strongly recommend NOT to VAT register at those turnover levels.
The admin hassle will be excessive. If the business expands, of course, that will be a different story.
I guess the OP needs to add up what the value of a reclaim would be and make a judgement.I would strongly recommend NOT to VAT register at those turnover levels.
The admin hassle will be excessive. If the business expands, of course, that will be a different story.
VAT was easy when I did it - two extra columns in the cashbook, and a return once a quarter. I'm sure technology has conspired to make it vastly more complex and expensive now, but that's progress eh.
If and whenever MTD for Income Tax comes in, then electronic records will need to be maintained by ALL sole trader businesses so that will apply whether VAT registered or not, although I'm waiting for that plan to be scrapped as it has been deferred 4 times already and will be 8 years late if implemented in April 2026 as is currently planned.
VeeReihenmotor6 said:
Surely you'd need to charge VAT on the sales, retrospectively, to be able to offset the VAT paid on past expenses? Unless you plan to wait for more sales, which will have VAT on top, but at £5k/annum surely that will take a while before meaningful offset and you'll be past the 6mth rule on the fence?
I don't think the hassle is worth it for a £5k turnover. If your expenses are way past the income raised it sounds like a hobby rather than a business - why add pain to the mix.
You can reclaim Input VAT on some items of expenditure that were incurred BEFORE the business became VAT registered. I don't think the hassle is worth it for a £5k turnover. If your expenses are way past the income raised it sounds like a hobby rather than a business - why add pain to the mix.
The normal items on which you can reclaim Input VAT incurred pre-registration are -
unsold stock on hand at the date of VAT registration
fixed assets purchased before the VAT registration date which were still in use at the date of VAT registration
VeeReihenmotor6 said:
Surely you'd need to charge VAT on the sales, retrospectively, to be able to offset the VAT paid on past expenses? Unless you plan to wait for more sales, which will have VAT on top, but at £5k/annum surely that will take a while before meaningful offset and you'll be past the 6mth rule on the fence?
'Offset' the VAT?We don't know if the OP's customers are VAT-registered (ie businesses) or Joe Public. That's a key factor.
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