Hee Hee :-)) This is the rub. But you have to ask yourself where the money lies. Is your market made up of mostly small domestic customers ? If you are VAT registered, would you gain more commercial work because of it ? To make the company limited is always the best way to go in my opinion, so that goes without discussion.
I personally went down this road because I wanted the bigger commercial jobs (yes, I'm a greedy bugger), and to compete in the more specialist market places. The larger providers didn't keep up with the times quick enough to take on board the flood of new digital technology and were falling by the wayside. In steps I to take a chunk of the new market, but, the big commercial sites want to be able to claim the VAT back just as much as everyone else, so I was being left out of the tendering while the other big guys were catching up. I was (?) sort of forced into taking the C&E mans hand and bite the bullet if I wanted to gain a slice of the cake, as they say.
It's a big decision to make and should only be considered if you know it will give you good enough returns, so take time to talk to accountants and the VAT men themselves before you jump in. There is a lot gain from it, but it can also cripple you if you do it wrong.
I remember a saying by an old business friend, who has just recently retired from a very successful venture he'd started on his own some thirty years ago, and the saying went like this "All is fair in love and war" then he also added to the end of this saying "And Business". :-))