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Originally Posted by smartile  Heres a question. Some of us are below the threshold for VAT which is great for the private domestic customers as added charges are not applied to their bill but on purchases where we all pay VAT we cant claim this back. Also It limits our chances of working for larger contractors as they cant claim back and therefore makes working for them difficult or impossible. How do you guys deal with this? Does it make sense to go for the bigger fish and risk the little ones or leave alone?  |
Being VAT registered or not should have no effect on working for a contractor. If you are not applying VAT to an invoice there is no VAT for the contractor to pay and therfore claim back from HMRC.
As for purchases, even though you are not claiming back VAT paid, you are in effect claiming the additional VAT cost against your profits and thereby reducing your tax bill.
There is nothing wrong with being VAT registered even though you are below the threshold. Only drawback is the necessity to keep andequate books to allow you to calculate the amount you would need to pay, and knowledge of the regulations etc.