A Straightforward Guide to Business Accounting for Businesses of All Types by Colin Richards

Author:Colin Richards
Language: eng
Format: epub
Publisher: Straightforward Publishing

b) Voluntary

Compulsory registration arises simply because of the proximity of your turnover to the threshold level.

As an alternative you may want to consider voluntary registration, even if your turnover is substantially below the threshold level for compulsory registration.

The advantage is of course that Input tax paid on purchases subject to VAT can then be reclaimed.

The disadvantage is that VAT will have to be charged on the taxable supplies made by the business, which could well affect the competitiveness of your products/services. If competitors are not charging VAT and you are this might present a serious problem.

If the business is not registered, compulsorily or voluntarily, then it will have to bear the incidence of Input tax paid. You will have to consider whether the business can absorb this cost or whether you need to raise the selling prices.

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