From my understanding, if you are permitted to and choose not to register for VAT:

  • You do not add VAT to the prices you charge to customers.
  • You do not have the right to reclaim VAT on business expenses.

However, how does this work with business customers?

Normally, if a business customer is registered for VAT, they will try to reclaim VAT on purchases from you. However, this doesn't make sense in this situation.

Do businesses you interact with have to know if you are registered for VAT or not and act accordingly? Must they simply not try to reclaim VAT when you are not registered for VAT?

  • 1
    Surely if you don't charge VAT, they won't get a VAT receipt so they can't make a (legitimate) VAT claim.
    – Rick
    Nov 2 '21 at 16:05
  • @RockApe I guess that makes sense thanks. Nov 2 '21 at 16:24

Businesses can only claim VAT when they hold a valid tax invoice/receipt

A purchase from a non-registered supplier (e.g. one who has chosen not to register, a foreign supplier, a private individual etc.) has no VAT, no paperwork and should not be claimed (although mistakes do happen).

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