Hello,
I've not understood your point where you explained why voluntary registration is not beneficial the business is making supplies to non -VAT registered customers. Could you just re explain it?
Thanks.
Ask the Tutor ACCA TX-UK
VAT
I think you need to watch the lecture again here and think about the whole concept of VAT - a sale made for £1,000 exclusive of VAT is £1,200 inc VAT - if the customer is registered for VAT the input VAT suffered can be reclaimed reducing the net cost to £1,000 - if the customer is not VAT registered then input VAT cannot be reclaimed so the net cost is £1,200. Therefore the customer is paying 20% more if they buy from a VAT registered trader - therefore the VAT registered trader is less competitive and less likely to make sales to those customers!
It's clear now. Thank you
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