Deregistering for VAT. Any reason not to?

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  • Deregistering for VAT. Any reason not to?
  • Over the last four years my turnover has been remained at the same level whilst the VAT threshold has risen and almost met it. I’m now in the situation that if I shut up shop and had two or three extra weeks holiday through the year I could stay under the threshold and save myself six to eight thousand in VAT payments.

    Possible downsides:

    My customers are patient folk but being closed too often may lose me a little long term business. Although 4-5 weeks holiday a year isn’t excessive, is it?
    Could people lump me in with Starbucks and Amazon as tax avoiders? But I would be paying more income tax.

    Anything else I haven’t thought of?


    As long as your customer base aren’t trade customers who would want to reclaim the VAT on their purchases from you, it would make sense.

    Less paperwork. As you say your income tax liabilities would increase but perhaps the holiday could be to source new products for the shop and become a cost against the business.

    Premier Icon nickjb

    Are you saying you would no longer be VAT registered but would still charge your customers VAT (or at least the VAT added rate)? I hover just under the threshold as it allows to offer a lower price to my customers so I can be a bit more competitive.

    Premier Icon BigJohn

    When I was VAT registered my work was all business to business and even though I was under the threshold it made sense to stay registered because it looked more professional, it wasn’t costing my clients anything and I could reclaim the VAT on all my outgoings.

    Now I’m in a different business, making furniture for private individuals it’s best to be unregistered because it makes my prices more competitive.

    Maybe you should look at the kind of VAT scheme you are on – I always accounted for all my inputs and outputs, whereas other schemes are based on a general percentage of turnover.

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