Today 90% of our turnover is domestic trade - we have not yet hit the VAT threshold and nor are we likely to this year.
However, we are refocussing our efforts to close the domestic side of the business and focus solely on commercial as it is less hassle, better margin and contracted work so guaranteed for 12 months.
As most of our customers will then be VAT registered am I right in thinking that it would be advantageous for us to register for VAT voluntarily so our customers can claim back VAT from our invoices?
For example, today we quote Company A £5000 for a contract and they pay us £5000 with nothing coming back in VAT or we quote them £5000 + VAT in which case they pay us £5875 but can claim back the £875.
We could even quote them £4700+VAT so they pay £5522.5 but claim back £822.5 from HMRC and we still get our initial £5000 (more or less) but the customer saves £300 - this would work for us as the majority of our costs are labour costs which we don't pay VAT on.
I know we will take a 10.5% hit on the 10% of our business which is currently non domestic which we will be keeping but I am thinking longer term.
Am I missing something or is the above a fair summary?
Jase
P.S. Sorry for the long post - brain is burning just now
VAT registration query 
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