Do I Need to Get Registered for VAT for Running Plumber Business?

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    I’m starting a new business as a plumber and don’t know if it would be a good idea to register for vat. Can you advise?

     

    It is only compulsory to register for VAT if your annual cumulative turnover to the end of any month exceeds £61,000 or if you expect your turnover to exceed this in the next 30 days. So it is likely when starting you will not have to register but you should keep an eye on your turnover every month to monitor this. By registering, you have to add VAT onto your outputs (sales) which if supplying non vat registered businesses or people such as the general public will put you at a competitive disadvantage and is generally not advisable if this is your main customer base. However, the advantage of registering will come if you are supplying mainly vat registered businesses who can reclaim the vat and it largely doesn’t matter to them whether you charge vat or not. By being registered you can then reclaim input vat on purchases and services including on any goods purchased within 3 years before registration, although this doesn’t include any goods consumed before registration such as electricity but it does not apply to trading stock and capital assets such as equipment. For services, you can only go back 6 months. A vat registered business may also have more credibility with potential customers. To register voluntarily it will be necessary to satisfy HMRC that you are on intend to carry on a business making taxable supplies.

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