hi there im new to all this and wondered if anyone could help i have just registered self employed and am buying goods but am having to pay vat only im not charging my customer vat as i am not registered do i need to register for vat is it compulsory or can i still claim back what i have paid out? many thanks
You are only obliged to register for VAT when your total income exceeds £73,000 in a year. It also depends on what you do, as some activities are exempt from VAT. However, you can choose to register for VAT, assuming you are entitled to do so. The rule-of-thumb is that if your customers are in business, then you should register. If your customers are private, then don't.
hi there thank you for your advice
its all so confusing and not sure whats the best for me some of the customers are not vat registered themselves although i have paid vat on products for them so in that sense are you saying i should just not charge the vat im no where near earning 70,000 a year so am only eligible for voluntary vat i think
thanks again
If you buy something for lets say £100 inc vat, sell to your client at £110 (10%) profit. As far as you are concerned at this moment, VAT means nothing.
Just add your mark up to the total cost of any goods you buy.
If you do register then you may want to consider using the flat rate scheme.
By using the scheme all you do is apply a percentage (dependent upon your trade) to ALL of the gross sales invoice amount. You would also be able to claim Input VAT on any capital purchases greater than £2,000.
The scheme has two benefits:-
- less admin in preparing the VAT Return; - possibility that your VAT liability using the scheme would be lower than using the ordinary rules.
However, please be aware that if you make exempt and zero-rated supplies then these would also be subject to VAT under the scheme.
