The Advantages of Voluntary VAT Registration for Small Business

How To Decipher HMRC’s Legal Letter?

Value Added Tax (VAT) is the sales tax levied against goods and services within the UK. Businesses with a turnover in excess of the VAT Registration Threshold (currently £77,000 P.A. 2011-2012) are required by law to complete a VAT Registration with HM Revenue & Customs. Businesses that fail to do so within 30 days of reaching this threshold are liable for a penalty for failure to notify.

Once a business is VAT registered it can charge VAT on goods and services sold to customers and also reclaim VAT charged on goods and services purchased for the business from other businesses, suppliers etc. VAT registration is therefore an important part of small business.


What is Voluntary VAT Registration?

Although VAT registration is required by businesses with a taxable turnover above the threshold it is still possible to voluntarily register your business for VAT. And there are several business benefits to doing so.


What are The Benefits Of Voluntary VAT Registration?

There are a few benefits of voluntary VAT registration which make it quite appealing for small businesses.


Avoiding Financial Penalties

No one likes to get an angry letter from the taxman. If you don’t keep a careful eye on your turnover then you might not notice when it creeps over the VAT registration threshold. You can be sure the taxman will though and failure to properly register could result in a nasty fine for your business. The obvious advantage of voluntary VAT registration is you won’t have to worry about passing the threshold or notifying HMRC in time. You can voluntarily register for VAT whenever you want to.


Boosting Your Business Profile

Starting out as a small business or new limited company it can be tough to compete against the big boys. Most people are aware of the VAT registration threshold, so voluntarily registering your business for VAT might give the impression that your business is bigger and more successful than it actually is.


Easing Business Dealings

Many suppliers and organisations are unwilling to do business with companies and SMEs that aren’t VAT registered. You might find that without the ability to produce a proper VAT invoice many of these people will be unwilling to deal with you. The advantage of voluntary VAT registration is you will be issued with a VAT registration number and can more easily deal with external businesses.


VAT Refunds

Another advantage of voluntary VAT registration is the ability to claim VAT on goods and services purchased for your business. If you are selling one sort of VAT Rated product (e.g. zero rated) while buying another (e.g. standard rated) you may actually receive money back from the HMRC in VAT refunds!


Reclaiming The Past

Voluntary VAT registration allows you to reclaim VAT from the last 4 years. So if you’ve been in business for a while, but not yet reached the threshold you can still reclaim VAT as long as you have kept the proper VAT records and invoices.


VAT Registration Number

Voluntary VAT registration means you’ll get a VAT registration number for your business. You can (and should) display it on your business website, stationery and correspondence. It will instil faith in your business and give your business a professional touch.


How To Register For VAT

You can directly register your business for VAT with HMRC. However because of the problems and issues associated with VAT registration the majority of people find it easier to use an agent. As a company formation agent we have plenty of experience helping people voluntarily register for VAT and getting the registration done correctly the first time. You can have peace of mind knowing that your business will be properly VAT registered and you can start taking advantage of the benefits.


Beyond VAT Registration

Once voluntarily registered for VAT you need to abide by the same rules as another other VAT registered business. This means keeping proper records, invoices and submitting a VAT return every quarter. This might be seen as one of the disadvantages of voluntary VAT registration, but in truth it is one small hurdle.
The good news is, our start-up and fixed fee accountancy services include support with filing VAT returns and can be tailored to suit your business. So there is nothing to lose in voluntarily registering your business for VAT.


Need More Help?

Just fill in your details here if you need help dealing effectively with your Startups or wish to discuss other matters. 

 Lanop Business and Tax Advisors love helping new startup businesses succeed. We provide comprehensive services from Company formation, support with raising finance, opening bank accounts, and developing business plans to monthly management accounts to help make key business decisions and meet all the requirements for a successful startup, and we have helped numerous companies. 

Our experienced financial consultants proudly serve in Putney, Harley Street, and Battersea. Our physical offices are in Southwest and Central London. Whether you require financial consultancy, assistance with tax matters, accounting solutions, or strategic business advice, our experienced team is here to support you every step. We value the trust you have placed in us and are dedicated to fostering long-term relationships built on professionalism, reliability, and exceptional service. 


Get In Touch

Address: 389 Upper Richmond Rd, London SW15 5QL, United Kingdom.

Tanveer Ahmad

Tanveer Ahmad

Tax Associate

Tanveer is ACCA qualified, with expertise in UK Individual and limited company accounting and taxation, Tanveer is dedicated to providing exceptional financial solutions tailored to your needs. He specializes in navigating the complexities of tax investigations, ensuring compliance and peace of mind. Trust Tanveer to handle your accounting matters with utmost professionalism and efficiency, allowing you to focus on what truly matters—growing your business. Let’s work together towards your financial success.

We are here for you

Stay connected with us

Get A Free Consultation!
Tanveer Ahmad

Tanveer Ahmed

Tax Associate

Free Consultation Call

Book A Free Call Worth £100

Enter Your Name & Email Address for a Free Consultation