should i deregister for vat

[purple]

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my turnover is below the vat register level my account suggests i consider deregistering.

Just wondered what benefits or costs are of doing it, I have few expenses I dont do ppc etc

[Barry]

Have you thought of registering under the VAT flat rate scheme?

It may be worth looking at registering as an 'advertiser' which is just 10.5% VAT, which means if you don't spend much you actually make money of the VAT you collect at 17.5%.

Ta

[ep90]

If you stay vat registered, you can put the vat (paid on top of your normal commisions by the networks) into a savings account. Then pay it to the vat man every quarter. Wether this is worth the hastle depends on how much you are earning I guess. Say you were getting £50k a year (network earnings) then this would be approx £400 interest annually (though you need to pay tax on this interest)

[The Ferryman]

Remember the flat scheme is a percentage of the gross turnover with VAT (117.5%), not a percentage of what you are bringing in.

[hrbs]

my turnover is below the vat register level my account suggests i consider deregistering.

Just wondered what benefits or costs are of doing it, I have few expenses I dont do ppc etc

Hi

Costs of deregistering - your broadband, hosting, professional fees, software, equipment etc costs increase by 17.5% as the VAT incurred would be non recoverable. Potential loss of interest on output tax received (as above post). You would have to do a final vat return and, if relevant, repay VAT previously claimed on business assets and stock on hand (assumed not relevant), subject to de minimis of £1k of VAT.
Further details are at http://customs.hmrc.gov.uk/channelsP...yType=document
(Section 6)
Credibility ... in some eyes, being VAT registered adds credibility to the business and disguises the business' level of turnover. This is particularly relevant in business to business transactions although not necessarily relevant in the AM sector.

Benefits of deregistering - 4 less returns to do per year, saving on accountant's fees if they do your returns, saving your time if you do your own. However, depending upon what software you use to keep your accounting records, this may not be a great saving as the information needs to be recorded whether or not you are VAT registered so that you can prepare your year end/quarterly management accounts.

However, you will still need to monitor your turnover monthly to check whether you have exceeded the threshold over the previous 12 months and should you increase your Adwords spend, also take that into account.

As Barry pointed out, the flat rate scheme may be a good move as it certainly simplifies the VAT return. Advertising has a flat rate of 9.5% (see the VAT ready reckoner at HMRC ). The flat rate scheme is explained at http://customs.hmrc.gov.uk/channelsP...yType=document .
Using the HMRC vat ready reckoner you can calculate whether it would have been beneficial for you for recent returns.

eg Net turnover of £50,000 pa ex VAT = gross turnover of £58,750. Flat rate VAT at 9.5% of £58,750 = £5,581.25 ( i.e. 11.1625 % of net turnover) . Input VAT is ignored for the flat rate scheme in most circumstances except where capital purchases are involved (explained at the HMRC link).

Regards

Keith
Fixed Fee Accountants and Small Business Specialists - High Royd Business Services Limited