Absence due to VAT!

[Phill Fenton]

I would have thought you should only be charging vat once you have completed the registration. Why can’t you carry on as before and only charge the vat once your registration is complete and you have been issued with a registration number?

[Mo Gillis-Coates]

Yeah I woyld have thought that too, but apparently the law says I have to account for it as soon as I ask for registration, from that date

[Steve McAdie]

I was going to register for VAT although not above threshold because i saw all the vat money i’d spent on machinery and stock and thought i’d claim it back after talking to my accountant i decided against it as i would have had to pay the vat on all the invoices since the date i back dated it to, can’t see customers being happy if you try to charge them vat on something they bought a while a go with no vat on it. Customers who are vat registered themselves probably don’t care as they can claim back.

[Chris Wool]

Steve there is a misunderstanding something is wrong with that statement that’s not how it works

[Steve McAdie]

Whats the mis understanding Chris?
Steve

[Mo Gillis-Coates]

Its not a misundestandin, that’s just wrong adviceE, you don’t have to do that at all, you can’t reclaim vat on anything you have aready solds. Or on anything uou have used up, such as petrol or utilities.

Only on stock you have in hand and on any asset that you have bought.

Its all explained really clear on the hmrc web site

Unless its different in scotland?

[Steve McAdie]

Going to sack my accountant now.

Steve

[Steve McAdie]

I’m no scot Mo more of a quarter breed.

Steve

[John Gregson]

Don’t forget Mo, you can account for the vat but cannot show it as a separate item on your invoices until your vat number comes through.

I’m going to go the other way – de-registering. Talked about it for ages but finally made the decision and busy sorting the vat 7 form in the next few days.

Cheers John

[Hugh Potter]

I’m shocked that you can do that Mo.

If I’d accepted a quote with no vat, there’s no way I’d be looking to spend another 20% just because the person doing the work has applied yo register while doing my work, I’d have signed and contracted you to do the work as non reg at the time if agreement, I would not see your vat reg as my problem and would return the vat request without payment.

Law or not, my agreement would be with you, not the vat man. And yes, I’d go to court over it!!!

Ludicrous rules. I don’t see the point of vat reg anyways, so I get vat back on purchases, paperwork etc etc. Everything I buy is offset against tax anyway so I don’t see the advantages of registering, nit to mention I’m nowhere near the threshold! Ok, if you’re a big trader I guess you can save the money there n then, but it just seems like unnecessary messing about to me.

[Mo Gillis-Coates]

Hi hugh, understand where your coming from, but your not vat registered so you can’t claim the output tax back, if your vat registered it won’t make a difference because you just take it off your input tax.

If however I quoted on a job for a non vat reg company and I put 20% on after then that I would understand. But, whenever I ask for a materials quote they always quote me the pre vat price and I expect to pay vat on top.

Its beneficial for me due to the outlay I’m having being a growth business, and the amount of vat I have already laid out. I have sold the retail side of my business so now all my customers are vat registered anyway. It means I get more profit in each deal.

As an example, before I was vat reg, I installed a sign for 1k the client was vat registered but I couldn’t charge vat. The materials cost me 500 plus vat so 600 I made 400 profit.

If I had been vat registered, I would have charged 1200 inc vat I owe the tax man 200, the client didn’t worry about the vat he can claim that back.

So now I can take the 100 back from the vat man that I paid on the materials, so now I make 500 profit instead of 4 and I owe the vat man 100.

So for me its worth a lot as all my clients are vat registered

[Hugh Potter]

Excuse spelling, on iPhone…

I think I see your logic, I guess if you only ever deal with vat reg’d buyers then there’s no prob, a big portion of my customers are not regd, the difference between £1k and £1200 is a big deal for a non reg’d customer.

With mire and more short let’s and with people spending less in general, I cannot see that charging am additional £200 to eatn £100 would work brilliantly. In theory perhaps but how many will go to the competitor who is not reg’d?

Not wanting to be negative – and this prob doesn’t apply to you as you know what you’re doing but, I’ve seen too many people run ‘ok’ businesses go vat reg’d, lose too many customers and then go to the wall, mainly retail users but still, with a good chunk of my trade being non reg’d I don’t think I’ll risk it. I’ve only list one job for not being vat reg’d in 6 yrs, I reckon being 20% more expensive than my competitors would cost me more.

Come to think of it… So your hypothetical customer comes in to me and says " ive been given a quote for a sign like this, its gonna cost me £1200 Inc vat", if it’s a non reg’d customer I can go £1100, make £100 more than I would normally and not owe the vat man a penny! If theyre registered I can knock off 10% to get the job, a few hundred profit and I still don’t owe the vat man!

Maybe I’m Missing a trick? I know I can’t physically joint the chain and claim it back but, come self assessment it’s alllllllll deductible anyways, youve already deducted the vat so can only now deduct the ex vat cost, right? So where’s the extra profit? Like I say, I’m prob missing something!!

[Mo Gillis-Coates]

can definitely see where your coming from hugh, but vat reg customers dont care about the vat, it’s not an issue at all (mostly)…

And yes your right, it does sometimes outprice you with non vat reg customers. But you are missing a little trick, I can probably get away with charging less than you even with the vat…. Cos i don’t pay vat on my rent, fuel, materials, heating, lighting, phone, mobile phone, vehicle purchases, services…… only if i was in the same position as you of course. So on your hypothetical job, I could charge 1100 inc vat, i would make £80 less profit than you, but I would have lower overheads, so i could probably claw that 80 back from another expenditure.

Again, I think it’s down to business model, the jobs i’m trying to work are mostly with vat reg customers as they are generally higher value jobs. I recently did a job for a company that grossed me about 20k the materials cost me about 8k plus the vat so that was £1600 off my profit margin. I could have charged that to the customer, no problem for them as they are vat registered.

the retail customers wont like the vat, just as you probably don’t like having to pay them on your supplies, yes they are still tax deductible on your returns but that just means your paying less tax on less profit.

Unfortunately we don’t deal with non vat registered customers any more as that’s retail and I’m commercial only. I have to give up all those jobs to my wifes business as she’s not vat registered and does all the retail stuff. i sometimes supply her with the materials for the job, but we hardly make any money from it, its a bummer really 😎 It was a sad day when we had to sell my on line business to her as we could no longer compete in the market place due to the vat we would have had to charge 😥 Oh well, I guess she will get all the profit from that now and I will just have to go without!

😉

VAT not for the feint hearted or those who are happy as they are… For me, I wouldn’t have been able to avoid it for much longer anyway :lol1:

[Martin Cole]

If your main business is B2B vat registration is the way to go. If it’s mainly to Joe public then probably not, unless you have to.

[David Hammond]

I registered for VAT from day one.

Reclaimed it on all my machinery, and I do work for several registered companies, with no issues.

My price list in the shop doesn’t mention VAT – just like tesco/asda/sainsbury’s don’t. You pay what you see, and the first the customer knows of VAT is when it’s on the receipt.

I am amazed how joe public think VAT is a way of us conning them out of money.

Mo get your list ready for what you can and cannot charge VAT on especially with the laser printer.

[Mo Gillis-Coates]

Hi Dave, I don’t sell anything with my laser printer, it’s purely for self promotional stuff, I do a few bits but for friends, as gifts….. lol

Yeah the vatable items thing, still working on that but I don’t think i do anything exempt yet

[John Gregson]

I think the only thing that’s vat exempt, or zero rated are flyers – what difference does the laser printer make?

[David Hammond]

How many leaflets, price lists, booklets do you print on a large format machine???

Almost everything that comes off the big machine is VATable.

http://customs.hmrc.gov.uk/channelsPortalWebApp/channelsPortalWebApp.portal?_nfpb=true&_pageLabel=pageLibrary_PublicNoticesAndInfoSheets&propertyType=document&columns=1&id=HMCE_CL_000102#P293_29418

Flyers are zero rated, but if they’re on a thick paper (i am sure it’s about 150gsm) they are standard, or if they have a form on them they become standard.

[Mo Gillis-Coates]

Hi Dave, I don’t really get mixed up in leaflets flyers or price lists, most of my work is large signs, vehicle wraps, signs, display and exhibition.. I farm that stuff out to litho

[David Hammond]

And then there’s charities.

I’ve just done some work for a registered charity.

Provided the charity are using what you’ve produced in a 3rd parties space, whether paid for or donated you can charge zero rated.

EG: My 6 banner stands are now zero rated, because they are being used in local supermarkets.

I would have to VAT if for example they wanted their van signing, as that is their own advertising space.

A nice lady at HMRC has clarified this for me.