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With the VAT rate increasing it is appropriate to consider whether to continue with your VAT registration?

The VAT deregistration limit is currently set at £68,000 since 1 April 2010, therefore if you make taxable supplies below this threshold you have the right to voluntarily deregister from VAT.

The main reason for deregistering should be driven by a business motive. If you supply to either exempt, partially exempt or non-VAT registered consumers the VAT is an additional cost to them, therefore you could make your prices more competitive by not having to charge VAT.

Another reason for deregistration is a reduction in your administrative burden, both time and cost. You will no longer need to submit the VAT return by the end of each quarter.  Although accurate and up to date record keeping is a good idea to assist with preparing financial accounts.

Before you deregister, weigh the advantages against the reasons why you registered for VAT in the first place. A VAT registration adds status and makes it easier to trade within the EU. Deregistering will mean that input tax you suffer is an additional cost to your business not passed on to your consumers. So the competitive advantage you may obtain by being able to charge your consumers less has to be weighed by the absolute cost of input tax to your business.

For further information please contact us at Haxton Chartered Accountants West London.

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