The drawbacks of VAT registration are:
- Administrative burden. As a VAT-registered business, there are VAT rules and record keeping requirements you'll need to comply with.
- It makes your goods or services seem more expensive. Charging VAT can make your goods and services more expensive-and therefore less appealing, particularly if your customers or clients are not VAT-registered business, or are end consumers who aren't able to reclaim VAT.
- You may be faced with an unexpected VAT bill. If your output VAT is higher than the input VAT, as it nearly always will be, then you need to pay the difference to HMRC. This can create cash flow issues if you're unprepared for an unexpected VAT bill.
The drawbacks of VAT registration are:
- Administrative burden. As a VAT-registered business, there are VAT rules and record keeping requirements you'll need to comply with.
- It makes your goods or services seem more expensive. Charging VAT can make your goods and services more expensive—and therefore less appealing, particularly if your customers or clients are not VAT-registered business, or are end consumers who aren't able to reclaim VAT.
- You may be faced with an unexpected VAT bill. If your output VAT is higher than the input VAT, as it nearly always will be, then you need to pay the difference to HMRC. This can create cash flow issues if you're unprepared for an unexpected VAT bill.
Our small business accounting guide walks through absolutely everything you need to know if you're considering starting a limited company. From different taxes, limited company advantages/ disadvantages, how to pay yourself, and what your key filing requirements are.
- When to register a Ltd company
- When to register for VAT
- How to take money out of your company
- Dividend tax rates
- Limited company expenses & corporation tax
- Annual accounts and deadlines
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Get a free accounting consultation to discuss your company accounting needs
Book a free 20 minute call with an accountant to talk though starting, registering or switching your company.
- Book a time online instantly
- Registering for VAT
- Self assessment
- Sole trader vs limited company
- Dividends and personal tax
- Registering your company
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