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Business attitudes to VAT registration

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HMRC has published the findings of research it commissioned into business behaviours and experiences associated with VAT registration. The research involved a telephone survey of 2,009 businesses, followed up with 40 businesses that agreed to be re-contacted. The main findings included:

·        VAT registered businesses were more likely to sell most to other VAT registered businesses (more than 60%), while unregistered borderline businesses tended to sell to consumers or unregistered businesses;

·        accountants were the most common source of advice on VAT among registered and unregistered businesses (67%/57%), followed by HMRC (14%/11%);

·        the most common unprompted reason given for voluntary registration was the expectation of reaching the threshold soon (26%), followed by agent advice (20%) and the ability to reclaim VAT (13%);

·        most saw reclaiming VAT as the main benefit, followed by improved reputation or credibility;

·        the most commonly anticipated drawback was additional administrative burden, followed by financial impact, such as the need to increase prices;

·        the most commonly used VAT support scheme was the flat rate scheme (46%), followed by cash accounting (15%) and annual accounting (5%); and

·        20% of unregistered borderline businesses admitted to having taken some action to remain under the threshold and outside the VAT system, most doing so because they expected VAT registration to have a negative effect on their profit, or their competitiveness, if the cost was passed on to their customers.

The report, ‘Behaviours and experiences in relation to VAT registration’, is available at

Issue: 1378
Categories: News