Registering for VAT
I had a call yesterday from a doctor asking about registering for VAT. The doctor said the GMC had advised that doctors that provide medical reports should register for VAT. Now, this is probably a rather simplistic statement of the advice given, but is all I have to work on – a check on the GMC website didn’t find anything to help me determine what they might have said. Having told the doctor what they needed to know I began to wonder how many other doctors are considering being VAT registered without realising the impact it could have upon the business records.
I don’t want to go into the intricasies of what doctor’s do that is liable to VAT at what rate – that’d take far to long and you’d fall asleep before you’d got much further than this! Suffice to say that thanks to a recent case that went to the European Court of Justice HMRC have made changes to what can be exempt and what has to have VAT added.
So, what’s the big difficulty? It’s not so big, but one needs to be aware of all the pros and cons of being VAT registered. Just because one makes a few supplies that would be liable to VAT if VAT registered doesn’t mean that you have to be. It might, of course, suit the person involved to be registered – perhaps they’ll be able to recover more VAT than they’ll be collecting, which means that HMRC would pay them to do it! Nice work if you can get it.
In this case, the person asking is a doctor and many of his supplies are likely to be exempt from VAT. This adds complexity to accounting for VAT. Does the doctor want that complexity? Particularly if they’re turnover for the services that are liable to VAT is less than the registration limit – currently £64,000 per year.
Registration is easy if you can fill in the form, and are patient. But are you ready for the accounting requirements once you’ve joined the club?
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