If your business has reached the level of VAT status, then on the one hand this is something to be celebrated. Only those businesses that exceed £85,000 in profit are required to charge VAT but while gaining this status is an indicator of business success, it does open up a some additional administrative burdens when it comes to dealing with HMRC.
Your prices will also increase with VAT added and agreements modified to reflect new prices for services.
Unfortunately, this will be the least of your worries with the bigger issue being a potential inspection of your tax affairs.
Your business is likely to be more under the microscope than it is for those below this threshold and far more attention will need to be focused on accounting to ensure your business doesn’t end up getting penalised for not declaring the correct amount on your VAT returns.
If you are particularly unlucky, your business may be subject to an inspection for no other reason than checks to see what VAT your business owes or if a refund is due when too much is paid.
If you require advice on reaching VAT status and what it means for your business, contact us today.