Should I have registered for VAT?

**bless 'em all** · 23 July 2012, 18:01

The VAT charged to your client by the agency would be paid as part of their VAT return OR paid to your company once you have your VAT number.

It's true you don't have to register for VAT if your turnover is<£77k but you if you don't register you can't claim VAT back on purchases or expenses ( or take advantage of the VAT FRS).

Do you have an accountant? If you do, talk to them. If you don't, get one.

**BolshieBastard** · 23 July 2012, 19:13

Originally posted by Derben View Post

Hi,

Just started a Ltd Co and will start a contract soon. I was told I had to register for VAT as the agency will pass the VAT on to me.
I registered for this reason but have also been told I didn't have to register for VAT until the company earned up to £77k.
So if I hadn't have registered, what would have happened to the VAT that the agency passed on to me. Would it just sit in the company account??? Searched t'internet but I just get more confused.

What are the benefits of registering for VAT early - I appear to have given myself more hassle...

P.S. please be gentle - all this is still new to me.

The agent wouldnt pass on any VAT to you if you were not registered. If you arent registered for VAT, you cannot add VAT to the invoice you send to the agent. Neither can you offset any VAT you may be charged in connection with your business ie VAT on hotel costs if working away from home.

You dont have to register for VAT until you reach the threshold or 77k T\O. You can voluntarily register for VAT under one of a number of schemes. Contractors normally use the Flat rate Scheme as it is simpler and you do not have to keep as involved records (although your records must still be accurate).

Under the FRS, you may be £1200 a year better off.

**Wanderer** · 23 July 2012, 20:11

I presume you have clicked on the link on the right side of the page that says VAT / Flat Rate VAT and read it all.

You MUST get VAT registered when your turnover hits the threshold but it's optional below that.

If you register then you can make money for nothing out of the flat rate scheme.

Let's say the agency takes no margin (for example) so they charge the client £1000 + £200 VAT. Then you invoice the agency for £1000 and you are not VAT registered so the agency pay you £1000 and the VAT man £200.

If you are VAT registered then the agency pays you £1000 + £200 VAT and it's up to your LTD to pay this to the VAT man. The agency claim this £200 back off their VAT return as an input so the net cost to them is zero - it makes no difference to them if you are VAT registered or not.

The bottom line is that VAT is only paid by the company at the end of the chain. The middle men claim it back off their VAT return.

A bit confusing, I know. There must be some examples out there that make sense of it.

**northernladuk** · 23 July 2012, 21:52

Do some ******* searching and research instead of being spoon fed how to run your business. V poor.

**backrubber** · 25 July 2012, 16:36

VAT Flat rate

There are one or two VAT Flat rate Scheme examples here:

ww w.mybookkeepingmanager.com/user-guides/

As stated earlier in the thread, if you have very few expenses, which is normally the case for on-site contractors, you can benefit financially each month by just using the VAT FRS.

Should I have registered for VAT?