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Carpet Cleaning Issues - Carpet construction, upholstery cleaning, stain removal, equipment, events, etc.

VAT. The effects?

Posted by Dave_Lee (Dave_Lee), 2 November 2003
20 years ago, when I was supplying and fitting carpets as well as cleaning, I had to register for vat. There had been severe freezing, and I had a lot of work replacing ruined carpets (coming from Loss Adjusters) and this in one quarter took me past the vat threshold. I didnt have the confidence in those days to charge the extra to my domestic clients and so absorbed it myself. This of course was recipe for disaster. Fortunately less than a year later I managed to de-register when the chancellor raised the threshold considerably.
My question is to those who have registered for vat - What effect has it had on your business?
Have you lost clients, jobs to quotes ratio's, number of jobs gone down/up.
One guy at the Alltec extravaganza told everyone how he'd been worried about the outcome of registering, but in fact his business with domestic clients had improved. He put it down to the fact that registration earned him more respect. Whats your views/experienc?
Posted by Fox (Fox), 2 November 2003
I used to run a domestic cleaning business aswell as commercial and am VAT reg.  The domestic was turning over 90K when I gave it up.  

I found the clients didn't mind paying VAT at all.  Infact alot of my clients ran their own business so they could the cleaning through their books as a perk!

What I will say is that if you do register then make sure you put the 17.5% in a different account when each payment comes in, otherwise it will get eaten in your general cashflow and you may have trouble when your VAT comes due.

Look at your purchases - do most of them have VAT on?  How much do you spend per quater.  This should help you when deciding - you need to know what you can claim back!
Posted by Ian_G. (Ian_G.), 2 November 2003

I know you cant tell us but I thought the Accountant Guy at the extragavanza was going to give advise on VAT registration and forming limited company etc.


What is your hourlr rate for time cleaning carpets
Posted by pre-vac_Nick (pre-vac_Nick), 2 November 2003
Allthough im not over the VAT threshold yet i am a limited company. I find i get more respect from the middle class customers but less from the normal working class like myself, but it seems to even out as the middle class have larger houses and more expensive suites,curtains etc so its swings and roundabouts Wink
Posted by Derek (Derek Bolton), 3 November 2003

My business was up and running when VAT was first introduced and until eighteen months ago I was still VAT registered.  It never did affect my prices to domestic customers.
I have now cut down considerably on the volume of work that I do so was able to come out of the VAT system.

I do agree with the post that recommends that you put the VAT into a separate account. The Customs & Excise people can be unforgiving about late payments and they have some pretty wideranging powers.

Posted by Fox (Fox), 3 November 2003
Did you know that if you are late with your VAT payment at first they will charge you 2% of total increasing progressively to 5%, 10% and 15%?

So if vatable make sure it's on time!!!!!

Posted by woodman (woodman), 3 November 2003
Couldn't agree more,

The Customs and Excise gestapo have more powers than the police.

Just get yourself disciplined to paying on time and go cash accounting, that way you will help your cash flow.

C & E have lightened up over the last couple of years after directives from goverment but nonetheless they are not to be messed with.

Having said that if you are buying a lot of new machinery and chemicals I would recommend registering
why let the goverment have your tax money when you can claim it back.

As for customers can't say that many have complained infact can't remember any.If some one has not used me because of VAT then  I am unaware of it. Wink

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