This is certainly a common question and one which can be expensive if you don't know the rules. You can voluntarily register your company, which may help with the kudos of you brand, however if you are B2C consider what your customer may say if you have to put your prices up by 20% when you do register. Once your turnover hits £85,000 (until March 2024) you must register, and if on a rolling month basis you are going to hit the threshold you must also register, unless your a seasonal business and just experiencing a peak. Once you register you must start charging VAT, issuing VAT inclusive sales invoices to begin collecting VAT until your VAT number arrives. In your first VAT return (5 weeks after your first quarter end) you can recover the net amount of VAT or will make a payment if your sales are higher. You can include in your claim the VAT you have paid on assets you have purchased for the business, going back 4 years, however you can only claim for VAT on services for 6 months. So, if you intend on using professional services to start a company where you may have large lawyer or accountancy invoices, it may be worth voluntarily registering so you don't lose this input VAT. There are other variables, so if you wish to contact us we'd be happy to help.
Frequently asked question