A business is likely to incur which of the following as a disadvantage of VAT registration?

Being registered for Value Added Tax (VAT) often leads to higher transaction costs for accounting. This is primarily due to the additional administrative burden that VAT registration brings. Businesses need to maintain detailed records of all transactions subject to VAT, including sales and purchases, and ensure that these records are accurate to comply with VAT regulations. The necessity of submitting regular VAT returns can also lead to increased labor costs if businesses need to hire additional staff or outside professional services to manage their VAT accounting effectively.

Furthermore, the complexity of VAT calculations and the need for precise reporting can result in increased time and resource expenditures. This set of requirements can be particularly taxing for small businesses that previously operated without such formal accounting processes. Thus, while VAT registration can ultimately benefit a business by allowing the recovery of input VAT, it does entail increased costs in terms of accounting and compliance efforts, making it a notable disadvantage.