Voluntary VAT registration

mrsbez_2

My OH is a self emplyed subcontractor and subs to large companies. (construction industry)

He is under the threshold for VAT but needs to buy new equipment and update his van.

We have been advised that it is worth him registering voluntarily for VAT so that he can claim back the input tax. Majority of his clients are VAT registered.

Is this correct??

We also need to sell his original van to purchase the new one. when he bought it originally, we had to swallow up the VAT element as he was not registered. Once he registers for VAT and sells this van, does he need to sell it plus VAT eventhough we have not claimed input tax back on the original purchase???

any advice??

LastMinute_2

I'm not too sure how it works for 'self employed', but I operate through a limited company, and am VAT registered.

Even though you're below the threshold it sounds like it would be beneficial to be registered. Does your OH have an accountant? Mine was able to give good advice about this (or you can always read up about it online!).

It also makes the company 'appear' to be earning more than it might be ... which can be a good thing.

conradmum

I agree it can often be beneficial to be VAT registered if you have to buy lots of equipment for your company as in effect the company doesn't pay the VAT on the purchase price. Also, it gives a better impression to other companies you deal with as they think your turnover is higher than it really is! If most of your clients are VAT registered it doesn't make any difference to them as they claim back the VAT they pay you.
Regarding your husband's earlier purchase of a van before he was registered, it is possible to claim back VAT on items pre-registration but I'm not sure of the details of this. Once you are registered, you have to declare all tax on purchases and invoices you write. I run a small business and do my own VAT returns. It isn't too difficult if you're reasonably numerate, no need for an accountant.