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Compulsory: When your sales exceed £85,000 in a 12 month period.
Voluntary: If registering your business for VAT will be a benefit to you (the be nefit is that you can reclaim VAT paid on supplies and expenses).
If you are VAT registered, you must also charge VAT to your clients. Simple when working for VAT registered clients but it can also be problematic.
Example: A builder replaces a roof on a privately owned house.
If he’s VAT registered, he can reclaim VAT he’s paid on supplies for the job. When billing customers, he will have to charge them VAT which they cannot claim back because they are not registered.
If he’s not VAT registered, he cannot reclaim VAT on his supplies. However, his clients will happily also not have to pay VAT!
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