to VAT or not to VAT?

A question about : to VAT or not to VAT?

Hello,

A friend of mine (not me!) is thinking of expanding and moving from self employed to a LTD company status.

His main concern is that by expanding his turnover may in theory exceed the VAT threshold, meaning he will have to charge VAT to his customers (mostly non-VAT registered). As a result he fears his non-VAT registered competitors will undercut him by 17.5%. In practice, he thinks that as he levies and collects VAT he will not increase much above Ј58k, but will still have to collect VAT.

what are the tangible benefits registering for VAT? I dont think the benefits are that great given his clients are non VAT registered.

Best answers:

• If your customers can't re-claim vat & your mostly supplying labour, rather than having to purchase stock, which YOU pay VaT on, stay un-registerd, for as long as possible.
  VB