I have been asked a question by someone who runs a small groceries shop whether they can self certify themselves for VAT. I have tried to look this up every where and do not have a clue what they are talking about. They say the don't take enough money to reach the threshold of £73k. As far as I can see they don't need to register for VAT but they want to try and reclaim the VAT they have paid on purchases.
I have explained that the VAT you pay on purchases is matched of against the VAT you have incoming from sales if you are taking £73k or more. Can anyone else enlighten me on this topic as i'm a bit confused.
I would assume that when they say "self certify" they really mean 'voluntarily register' for VAT. Of course, they could do this but they need to appreciate that the ability to reclaim VAT on their purchases comes with the obligation to charge it (where appropriate) on their sales.
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Pearce & Co - Chartered Accountant and Chartered Tax Adviser
Make sure your clients are fully aware of the implications of VAT registration. I've lost count of the amount of clients starting out in business who have approached me about voluntary registration because they have been told by experts down the pub that this would be a great idea as they get their money back on their equipment purchases, not realising that they will be hit with VAT bills later on and decreased profits, not to mention the increased admin/accountancy/bookkeeping bills.
