[accent]

Hi, if I can just add my input to the above as it's not quite right.

VAT is a neutral tax to a business that is registered and costs you nothing except administrative overhead, which is a cost of course. VAT accounting is not to be taken lightly I assure you!

You make no profit and no loss from VAT. Basically if you register you are collecting a tax on behalf of the government, not paying it yourself.

Here's an example.

You buy a product for £x and pay 20p VAT.

You resell the product for £x and the VAT is 30p.

There is 10p excess VAT here, and this is then sent to HMRC to balance it out. Since you reclaim the other 20p from your original purchase, it becomes neutral.

Your profit is in the amount NET of VAT. As you can see, this does not cost you anything at all, since you are having to charge VAT on to the customer, only a non VAT registered customer will ever actually "lose" money to VAT.

Please feel free to ask if you require further advice on VAT, if I dont know myself or am unsure I can point you to the right place. Be absolutely sure never to mention or charge VAT in transactions if you are not registered. Doing so is a very serious offence.