Looking for some advice on whether I should register for VAT.
I’m currently buying and selling food products which are zero rated for VAT. I don’t turnover £80k yet, so no requirement to register at the moment, but when I purchase things like boxes, packaging, delivery / courier costs I pay VAT on nearly everything.
Sorry if this is a silly question, but if i’m selling items that are zero rated, but have lots of costs where I’m required to pay VAT and I being silly by not registering for VAT anyway? Am I missing something?
For example, I purchase a food products from supplier which is zero rated. I then sell my product to a customer, but then send it in a box I paid £1 + 0.20p VAT, along with delivery costs of £6.50 + £1.30 VAT. If i’m paying £1.50 VAT for that entire transaction, without charging VAT to my customer then presumably my VAT return would be £0 each quarter?
You can register for VAT voluntarily and you become a ‘repayment trader’, that is, its output tax is regularly less than input tax because the business mainly has zero-rated sales and you can also HMRC for the monthly return option so that the refunds come to you monthly. The VAT refund/payment is the difference between output and input tax. So in your example above, output tax will be zero and input tax £1.50, hence a net refund of £1.50.