Advantages of Being VAT Registered: Explained

Advantages of Being VAT Registered: Explained

Advantages of Being VAT Registered: Explained


To run a business in virtually any country, different conditions, procedures, and fees apply. However, some requirements depend on the size of the company.

Although not mandatory for all businesses to register for VAT, the process affects both SMEs and large corporations. Even though your establishment does not meet the threshold for compulsory VAT registration, it is advised to consider voluntary VAT registration. Voluntary registration is when a business (usually a small business) registers for VAT even when the turnover is below the VAT threshold.

Perhaps the biggest reason why some businesses avoid VAT registration is to avoid paying the levy. However, there are benefits of registering for VAT that outweigh avoiding the VAT rate. In most developed countries, the government applies VAT to products manufactured and sold within the country. No matter the size of your business, you can benefit from registering for VAT in many ways. In this guide, we will explore six advantages that registering for VAT can bring to your business.

You Can Reclaim VAT Refunds


VAT registration provides the opportunity for businesses to cut costs by getting VAT refunds. When you make a transaction with other businesses, you also pay VAT. Upon registration, you may proceed with VAT recovery for your business’s goods and services from clients throughout that year. The reimbursement could be significant depending on the value or quantity of the transactions.

Furthermore, keeping invoices from purchases throughout the establishment of your business is crucial. Not only can you claim VAT refunds for the current year, but you can also do the same for previous years. Indeed, you may claim refunds for purchases as far back as four years earlier. 


Others Will Take Your Business More Seriously

Due to the eligibility requirements of registering for VAT, small businesses rarely register for VAT. With VAT registration, most individuals and organizations would assume that your business exceeds the VAT threshold. For instance, to be eligible for VAT registration in the UK, your company must generate more than £85,000 in taxable returns yearly. 

Meanwhile, the average yearly revenue of small businesses in the UK (with a staff strength of less than 50) is about £67,000. Only medium-sized companies with nearly 250 employees make significantly more. Thus, VAT registration puts you in the same bracket as the big players in your industry. Since the outside world expects big corporations to meet this requirement, having a VAT certificate boosts your company’s profile. Soon, potential clients and competitors will begin to take your business more seriously. 


It Keeps You on The Right Side of The Law

Registering a company for VAT is mandatory as long as the establishment exceeds the threshold. This implies that an intentional refusal to register for VAT is a violation of federal law. If found guilty under the Value Added Tax Act, it could result in severe punishment. Registering for VAT, especially when you are eligible, keeps you out of trouble. It is always better to have the law on your side.


You Get VAT Registration Certificate and Number

One of the benefits of registering for VAT is having a VAT registration certificate. Upon getting a VAT registration certificate, you will also get a registration number which gives your business an identity and a more professional air. Although you can’t always present your VAT certificate, you can display your VAT registration number on your documents when you make transactions or applications. Having your VAT number on invoices, official letters, or even your online platforms gives your business a professional appeal.

You Don’t Need an Agent to Register VAT.

When it comes to registering for VAT, the procedure is relatively straightforward. Indeed, you do not need to hire a solicitor or any other agent to help you. Besides, you can do this procedure online by yourself. This shows how relatively simple the process can be, helping you save time and money. From registration to exemption and re-registration, you can do it all from the comfort of your home.


Transfer of VAT Registration Is Allowed

The process of registering for VAT is flexible. It means that you can always transfer VAT registration from one business venture to another. Thus, you wouldn’t have to pay a fee to register another business if you decide to cut ties with your current one. Also, you can transfer your VAT registration if your business status changes. You can also edit your VAT information. 

Changing the details of your VAT registration - address, name, and account information - is straightforward. Besides making changes to your VAT details, you can also get a VAT exemption regardless of your eligibility status. By doing this, you would not need to pay VAT for the foreseeable future. 

Final Thoughts

The advantages of registering for VAT shows why every business should be pro-VAT. VAT registration opens opportunities for investment and clientele expansion. Acquiring a VAT certificate and registration number boosts your corporate image. People quickly assume that you are a significant player in the league of industry giants when you have a VAT certificate.

However, having a VAT certificate and number for your business comes with some responsibilities. Compared to pre-VAT registration, you need to pay more attention to keeping accurate records and filing VAT returns. Although it takes 30 days on average to receive a VAT certificate upon the successful completion of the registration, it will be worth the wait in the end.