It’s Friday and time for another Reader’s Question. In these weekly blog posts I publicly answer a question/topic sent in by my blog readers. If you want to participate, all you have to do is send in your question using my help desk here. Even if your question isn’t picked for this blog post series, I will still personally reply to you with a full answer within 24 hours, Monday – Friday (and normally much sooner than that!).
Going back to today’s question, I really don’t like to be repetitive but there are some topics that simply need to be repeated as there can be some serious consequences if you make a mistake with this.
Here’s the question Michael sent in:
You advise against registering for VAT for as long as possible. However, if I were to register, I would be able to reclaim the VAT paid on any goods I import. And as such the question seems to me to be a tradeoff between a lower price (easier to sell the product) but lower margin (due to lost VAT), vs higher price (having to charge VAT) but also higher margin (due to reclaiming VAT on sourced items).
So, why would you always advise against registering?
Thanks for your email Michael.
Theoretically you’re correct, yes. Sell for a lower price when you’re not VAT registered and for a higher price when you’re VAT registered BUT this only works on paper.
In real life, on platforms like eBay & Amazon, you’re not the one who determines the product price. Well, you can of course set it as you like but essentially demand will dictate the price you can charge for your products. [Read more…]