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1. Is it wise enough to voluntarily register for VAT? Value Added Tax, or VAT, is imposed on almost everything we buy or sell. Moreover, if you are earning above a certain amount from your business, then you have to register for VAT. And, if you earn below that amount, then you may register if you want. But, the thing to understand here is, is it essential to do so? When is VAT registration compulsory? Currently, if the annual turnover of your business is more than £83,000, you must register for VAT.Remember that the amount mentioned here is ‘turnover’ and not profit.So, if you cross this figure, you’re liable to pay the taxes and national insurance. Also, it is essential to consider all the taxable supplies, even if the rate is 0%, except the items that are VAT exempt. Why do opt for voluntary registration? The two main reasons that favor voluntary VAT registration are:  To reclaim VAT  To have a positive impact on clients.

2. After having registered, if you charge VAT on your products, it is possible to reclaim this VAT that’s charged to you i.e. input tax. And, when your input tax surpasses your output tax for any span, you’ll be able to reclaim the difference amount from HMRC. When a business is VAT registered, it makes a positive impact on customers. Else, your business may be considered as ‘small.’ Negatives effects of VAT registration VAT registration has some adverse effects as well.  The price of your products or services rises as you have to add this amount to your selling price. This may cause losing of customers due to increase in price. It is common when the customers are not able to claim back the VAT.  If your output tax is more than your input tax, then you’ll be in a loss by paying the difference amount to HMRC. This will cause cashflow issues. You’ll have to do a lot of paperwork for filing VAT returns, which should be done quarterly. You’ll be required to have a VAT accounting element to bookkeeping and other reporting processes. Also, you may be charged penalties for late filing. Is it possible to de-register a business from VAT? If after voluntary VAT registration, you face the negativeeffects and decide to de-register the business from VAT, then you may do so. You can step back anytime until the turnover amount of your business is less than the threshold value. Moreover, you’ll also have to de-register from VAT if your business discontinues making taxable supplies or becomes part of a group. Selling a business or having avariation in its legal structure will also require you to de- register.And, if you want to end trading, then you’ll have to notify the HMRC and the Companies House. Conclusion VAT is a complex issue. So, you must wisely decide for voluntary registration of VAT. You can earn some extra income from your business if you choose it

3. correctly. Therefore, you should do it carefully after thorough consultation with experts. Otherwise, it may cause loss to your business. Author : Evan Kenty at ZDK Formations ltd We are a dynamic team of company formation professionals striving to make company formation and maintenance as easy as possible to help entrepreneurs achieve their dream of financial and personal independence. Our team have 75 years of combined experience in company formations on a global scale. So you can trust that we will give you the highest level of service for the best value. We are so committed to our customer relationships that we offer free lifetime business advice and support before, during and after formation. We want you to be successful and we have all of the resources at our disposal to keep you in business. Whether you’re starting a bakery, tech startup or a clothing line, it’s never been easier to start a business: Quick set up– It only takes 3 hours on average to get your new company name Simple – Our registration process is simple and easy to use Authorised Agents – We are authorised by Companies House and HMRC 256bit Encryption – Your details are secure with us. We use the best online protection platform