Vat registration for new limited company

zygurat789

Aquamania wrote: »

Well it's either that or a 16.7% deduction in turnover in 4 months time :cool:
(assuming no change to sales volumes, and therefore costs)

So the VAT % ends up in the business bank account not HMRC.
That's what's cool

HatAndScarf

zygurat789 wrote: »

So the VAT % ends up in the business bank account not HMRC.
That's what's cool

With respect, I believe yoiu are taking a rather simplistic and/or short sighted approach to matters.

Your scenario only works if you exclusively sell to non VAT registered businesses, and then probably only ones that don't understand the implications of VAT

Let me explain.

Say you sell items with a market value of £100 exc VAT (i.e. £120 inc VAT)

For the small market I have already highlighted, then yes they won't care they are paying £120 ... and yes you will pocket the extra £20 for a while whilst you are not VAT registered.

However for the more knowledgeable customers, they may resent having to pay essentially £20 extra, money that would normally go to the governement as tax to provide essential support and services to themselves & others .. so you may lose those.

And you will certainly lose those VAT registered customers (able to reclaim VAT if applied) who would consider the market price as £100, yet you were charging £120, so they will take their custom elsewhere.

The problem with losing potential customers is they may never come back.

paddyrg

HatAndScarf wrote: »

And you will certainly lose those VAT registered customers (able to reclaim VAT if applied) who would consider the market price as £100, yet you were charging £120, so they will take their custom elsewhere.

That's me! I did just this - a fairly decent, similar price on a flight case I needed from 2 suppliers, one VAT reg, one not. I wanted to use the first supplier, but being non-registered he'd 'baked in' the VAT making me look wider and now dropped him as a supplier.

zygurat789

HatAndScarf wrote: »

With respect, I believe yoiu are taking a rather simplistic and/or short sighted approach to matters.

Your scenario only works if you exclusively sell to non VAT registered businesses, and then probably only ones that don't understand the implications of VAT

Let me explain.

Say you sell items with a market value of £100 exc VAT (i.e. £120 inc VAT)

For the small market I have already highlighted, then yes they won't care they are paying £120 ... and yes you will pocket the extra £20 for a while whilst you are not VAT registered.

However for the more knowledgeable customers, they may resent having to pay essentially £20 extra, money that would normally go to the governement as tax to provide essential support and services to themselves & others .. so you may lose those.

And you will certainly lose those VAT registered customers (able to reclaim VAT if applied) who would consider the market price as £100, yet you were charging £120, so they will take their custom elsewhere.

The problem with losing potential customers is they may never come back.

As you said, "It works"
Where did the OP say that he was selling to VAT registered companies and where did he say that he was not only selling to the general public?
For those who can use this it is a very good reason for not registering until the latest possible moment.