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This is a question I hear on a regular basis and the answer is not always simple.

The first thing to consider is the compulsory VAT thresholds, because if you meet either of the two following criteria you are required to be VAT registered:

• Your business has a VAT taxable turnover of more than £85,000 over the previous 12 months
• Your business is expected to make a VAT taxable turnover of more than £85,000 in the next 30-day period

VAT taxable turnover is the total of everything you sell or invoice for, that is not exempt from VAT.  So, for example, if your business made standard rated sales of £70,000 and exempt sales of £30,000 there would be no requirement for the business to register for VAT as the VAT taxable turnover would only be £70,000.

However, just because you do not have to be VAT registered does not mean that you should not be.  If your business makes zero-rated supplies or, a mix of standard rated and exempt supplies, it can still sometimes be beneficial for your business to be VAT registered as you may be able to reclaim VAT back on some of your purchases.

This is not always an easy decision as you will need to consider the following:

• The amount of VAT you may be able to reclaim compared to the admin burden of running a VAT scheme
• What sector you work in and how VAT would impact your customer base
• Will being VAT registered make you more attractive to new suppliers and businesses

VAT can be complicated, but we are here to help.  If you would like to speak to one of our specialist advisers about being VAT registered or have any other VAT related queries, please do not hesitate to contact us or visit one of our offices in Dalston, Dumfries, Penrith, or Workington.