I assisted my manager with the completion of a VAT application for a small retail shop yesterday.
I was told that the VAT threshold is cuurently £ 77,000 but what confused me is that the application that we completed was for a new business who has just started and has not yet made any money.
From my little knowledge gained so far, I know that a VAT return can be lots of work, so why would a client want to VAT registered when they do not yet need to be. The accountancy firm I work for will be completing the clients VAT Returns, so this will also cost them more money so another reason not to register. I'm sure there is a good reaosn why they are registering but as i'm still learning it does not make much sense to me.
For instance if they sell childrens clothing and shoes then these are zero rated from VAT viewpoint. They wont pay any VAT on their sales but be able to reclaim VAT on their expenses.
Another reason is that there may be VAT on set up costs which they want to reclaim.
Another reason is that their turnover in the next 30 days is expected to be more than the VAT threshold (unlikely for a new business as they wont know how they will do).
If the business is selling standard rated goods and is making a profit then as you say if they are below the VAT level of £77k then makes no sense to be VAT registered as will need to give 1/6 of sales to the VAT man and as you say there is the additional costs of your firm doing the work.
Ask your manager as they will know the reason and without further info i am just guessing with the above.
Could also be an image consideration. I had someone register lately because the major motor dealers wouldn't deal with his company unless it was vat registered.
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Tony
Responses are intended as outline only. Formal advice should be sort from your Institutes Technical Department or a suitably qualified Accountant.
Could also be an image consideration. I had someone register lately because the major motor dealers wouldn't deal with his company unless it was vat registered.
I have a similar situation with a client who had become a ltd co because his own clients don't work with individuals
With the implementation of the Value Added Tax (VAT), a threshold has been set at which persons must be registered as VAT taxpayers. For VAT purposes it is not the business activity which is registered, but the person who conducts it. The registration covers all the business activities of that person
Really....
Actually, not factually correct.
a person can own many companies and each company can be registered, or not. (provided that the division was genuine and not to avoid VAT registration).
The VAT registration number relates to the business, not the person owning the business.
Not sure what question you were actually answering there but the fact that your answer was cut and pasted from this site on VAT in Saint Lucia :
-- Edited by Shamus on Thursday 19th of July 2012 06:53:20 PM
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Shaun
Responses are not meant as a substitute for professional advice. Answers are intended as outline only the advice of a qualified professional with access to all relevant information should be sought before acting on any response given.
With the implementation of the Value Added Tax (VAT), a threshold has been set at which persons must be registered as VAT taxpayers. For VAT purposes it is not the business activity which is registered, but the person who conducts it. The registration covers all the business activities of that person
