My client has just started his consultancy business and expects to charge 12,000 a month in fees. So he will reach the VAT threshold in about 7 months.
He is concerned that if he doesn't register now then he may have to pay VAT on his sales for the first 7 months when he does finally register. I have assured him that he does not need to register until his fees cumulatively reach 85,000 and he will only have to pay VAT on fees generated after he registers for VAT.
I did read a comment somewhere that if you know you will exceed the threshold in the next 12 months you should register now but I'm sure thats wrong. Reading HMRCs website it seems to say if you expect to do over 85,000 in a single 30 day period you should register other wise its when you reach 85,000 in any cumulative 12 month period.
So I'm 99% confident that the client does not need to worry about registering for a few months yet but just wanted that final 1% re-assurance!
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Being VAT registered can also help business credibility. May not be an issue for your client but not being VAT registered informs customers that turnover is <£85k
And given his work, presumably all his clients will be VAT registered, so no effect on his business.