Background: I use Kickstarter to raise money for manufacturing a product which is then supplied to my Kickstarter backers, many months after payment has been made. I understand these transactions count as sales and are potentially subject to VAT. Thus far I have not registered for VAT as my sales have been well below the VAT registration threshold, and I don't expect this to change for some years (my last two campaigns each raised a mere £15k). But I'm concerned about what would happen if a campaign was unexpectedly successful.
The problem: Suppose I have an unexpectedly successful campaign which generates pledges over the VAT registration threshold. I understand that under the backward look rule, I only become liable some time after my sales exceed the threshold.
But with Kickstarter, pledges made during the campaign are not paid (and therefore received by me) until a fortnight after the campaign closes. So in the event of a highly successful campaign, I could easily find myself in the position of having pledges that exceed the VAT threshold, a month or so before I receive payment. There is some uncertainty involved: customers can in theory withdraw their pledges before the end of the campaign, and their payments might be declined after the campaign closes, leading to me not receiving the funds. In practice this accounts for a fairly small % of funds.
It is worth noting that I cannot change the amount I charge a customer for a pledge between the pledge being made and the funds received. It would however be possible if utterly nightmarish to change how much I charge customers who pledge after the threshold is exceeded. So I have limited ability to start charging for VAT midway through the campaign, and no ability to charge customers who have already pledged.
The question: Would the fact customers have made pledges exceeding the VAT threshold mean that there's a reasonable expectation that my taxable supplies will exceed the VAT threshold? And does this in turn mean I would be required to register for VAT mid-campaign? And because the funds would then be received after I register, I would be liable to pay VAT on all of the pledges, including the pledges made prior to my registering for VAT?