If your gross take is over £1,000 a week, you could well be getting close to compulsory registration. It isnt a choice.
In our area, Owner drivers (generally grossing under £1,000 a week) dont need to register. But, as an operator with a turnover in excess of the threshold one does need to register.
As to whether the fare is VATable or not, depends on the contractual arrangement between the parties.
If a non-registered owner-driver charges a customer a cash fare, then it is usually held that the contract exists between the owner-driver and the customer, thus no VAT is applied.
If the owner-driver does an account fare, that is invoiced not by himself but by the operator on whose circuit he operates, then the contract is between the operator and the customer, and as such, is liable to VAT as the operator is a `registered person'.
If you get two owner drivers, one who takes more than £1000 a week, and one who takes just under a £1000 a week, then the non registered driver is better off, as he doesnt have to pay 14.89365% of his gross take to the VAT man. While he can offset VAT reclaimable expenses such as fuel from his output tax, the truth is in the cab business that only about 20/30% of ones costs are VAT reclaimable in the first place. That leaves you with a problem. You cannot charge extra on your fares for VAT when running on the meter, as the metered rate is usually regarded as gross, so overall, you have just lost around 10% (as Wharfie said) of your income to the VAT man.
To my mind, this is bang out of order, as, you are as much of a public service as a nine seat transit operating on a PCV licence is, yet they are exempt from VAT. How fair is that?
At the end of the day, if your take isnt more than the £55,000 a year threshold (or whatever it is these days) then there is no way on the face of this earth that you want to voluntarily register for VAT. Not in the taxi business.
Andy where did you get that from about a nine seater? beccause I am told 9seats and under vat over 9 none