Odd situation that perhaps could benefit from paid advice but others may have useful insight…
I’ve formed a new small company expecting to stay below VAT threshold, and am negotiating my first significant contract (but not more than VAT threshold!). Customer (in Germany) expects a VAT number. If I register voluntarily, they will pay the VAT directly in germany (reverse charge procedure) and then I can claim back VAT on expenses incurred in UK, right? So that’s a win for me, compared to if we keep everything VAT free.
I realise that in general VAT registration would put up my prices but not in this case as the germans have basically already anticipated paying the VAT on top of the agreed sum, and there is no option to just take the extra money in my pocket (cos they won’t pay it).
Have I overlooked any pitfalls/drawbacks in this idea? How much of a pain is the VAT process anyway? Worth it for a couple of thousand quid in a year? I could try arguing with the germans but that might not get very far….