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VAT Registration - reclaim VAT and expense?

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Hi all,

We're an IT Support company in the process of registering for VAT as our turnover is set to exceed £85k.

Now, our customers currently claim our invoices as an expense - so deduct it from their Corporation Tax liability calculations.

If we add VAT into all our invoices, from a customer point of view (who are all VAT registered), can they reclaim the VAT AND still mark the invoice as an expense to reduce their Corp Tax liability?

Just trying to find out how us registering for VAT would affect my customers, and whether (in reality) they'll be any worse off in cash terms.

Many thanks

Tom

Replies (4)

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By Winnie Wiggleroom
13th Aug 2021 09:46

they will be no worse off, apart from in cashflow terms.

May I respectfully suggest that if you do not know the basics of VAT that you need to speak to your accountant.

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By lesley.barnes
13th Aug 2021 09:52

Your customers would reclaim the VAT and claim the expenses less VAT in their accounts.

You need to speak to your accountant before registering for VAT, there is a lot more to worry about than how it will impact your VAT registered clients.

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By Duggimon
13th Aug 2021 10:38

Your customers are only worse off in that they pay you an amount of VAT and have to wait up to four months to get it back from HMRC, beyond that it makes no difference to them. VAT is really only detrimental to businesses whose customers are not registered for VAT.

I will concur with my esteemed colleagues above that with an IT support business with over £85,000 turnover, you will benefit from having an accountant. By benefit I literally mean you will be better off financially, you will save more than you pay in fees.

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By teejay091
13th Aug 2021 10:43

Thanks everyone for your replies - and I certainly will engage an accountant before registering for VAT.

Much appreciated - thanks everyone!

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