VAT Registration necessary?

It's not really worth the hassle in my opinion. You have to give it back and fill out extra forms. Unless you're buying a heap load and selling a heap load, dodge that bullet until you're over the threshold.

Do most recruitment agents ask that their freelancers be VAT registered?

I can't comment on this, hopefully someone else can!

Hi, I was persuaded by my accountant and I think it's just about worth it if the majority of your clients are also registered (ie if you do work for non registered people they won't like you adding 17.5% to your invoices), I'm on the "flat rate" scheme, the main advantage for me was being able to get back most of the VAT I had spent on purchases (computers and office stuff) for the business leading up to me going self-employed, it was several hundred pounds back ! and then when you invoice people you add the vat and then keep a percentage, you CAN'T claim anymore from purchases. It's a little bit of a pain every quarter but not too bad .... have a word with an accountant. Regards Roger

You do have to register by law if you bill more than a certain amount in a year. I'm not sure of the exact figure but I think it's over £60k. Other than that, there is no business reason to do it. I never had a client refuse to use me when I wasn't VAT registered.

Having said that, depending on your business, it could be beneficial for you to register on the Flat Rate scheme. This is incredibly easy to manage (I just do a quarterly VAT return which takes 10 minutes) and you can actually make a profit on it. I'm classed as a marketing agency and I charge at 17.5% and pay at 9.5%.

This works as long as you don't buy services in, mark them up and sell them on - in which case you'd need to claim the VAT back on those services, something that you can't do if you're on the flat rate scheme. If, like me, you just bill for your time, then it could be ideal.

Hope that helps.

Gill