[Mark Slaney]

  What's the vat threshold now, all I can see is that it's 77k. Is this correct?

  Also in laymans terms whats the difference between registering for vat and going voluntarily.

 Cheers mark.

[Jim_77]

Not up to date on the threshold but that sounds about right.

Don't forget if your business is growing at a significant pace and you're not far off the threshold,  it could catch you out.  If you end up reporting a turnover in the year greater than the threshold you could get back-charged and I think maybe penalised in some way... you kind of have to predict if you're going over.

Have you looked at this?

http://www.hmrc.gov.uk/vat/index.htm

[Jim_77]

No difference at all between being obligated and doing it voluntarily.  I personally can't see the sense in running a business non registered, you have to charge pretty much the same non-vat as inc. vat to make up for the fact you can't claim it back on your purchases.  I've never found it an issue.

[Mike Halliday]

I've always done everything legally possible to not have to reg' for VAT, I diid almost reg 4 years ago but when I worked out the figures it did put more money in my pocket.

It would be interesting if any finance wizards could do a mathematical formulas to work out how much expenses  you would have to spend per year to make it more worthwhile to pay 20% to the government than to have your prices at the plus 20% level... but keep that 20% as pure gross profit.

I've got to say 95% of my work is non vat customers-domestic

[Simon Gerrard]

Mike,
I really don't understand your business. You spend a small fortune per month on advertising and yet your a long established business that shouldn't need to do anywhere near as much advertising and should be able to survive on past customers alone. And now you say you're under the vat threshold but keep telling us how busy you are and how much you charge and so couldn't possibly have a turnover under the vat theshold. I hope you've done your homework on the vat issue because I know for a fact the HMRC takes a pretty dim view of people setting up second companies that;
1. Others use to run a similar business,  carpet cleaning and pressure washing combined under one business.
2. Setting up a partnership for the second business and yet using the assets of the first commonly between the two businesses, so that the only reason for the partnership is the avoidance of vat.
I'm not suggesting you don't know what you are doing but things have changed in this regard and it is nowhere near as simple as it was to avoid registering for vat.

Simon

[Mike Halliday]

Simon you don 't need to understand how I run my business.... That's my job. Just like I don't understand why you as an established business needs to have websites for areas 40 miles from where you live..... But that's your job ......we all run our business our own way.

As spending a small fortune on advertising I don't spend anything, I invest money that has a 6/8-1 return.

[The Carpet Cleaning Pro]

[quote

I invest money that has a 6/8-1 return.

What and you not over the vat threshold???




[/quote]

[Mike Halliday]

Don't have exact figures as I 'm on a job but we spend  about £200 a week on advertising so a 7-1 return would be £1400 so yearly with holidays that would still be under the limit but this is very simplistic so is open to misunderstanding.

Would anyone else spend £200 to earn £1400? All within 4 miles of your front door, how much money are the people spending on fuel who work a 40 miles radious? I bet it's 3 times how much I spend...... This is why it's a bit more complicated than it first appears

[Neil Williams]

Let's not forget the VAT threshold of £77k is based on turnover and not profit, because I know there are some that don't understand this.
I'm with Simon on this, as I don't understand how you aren't turning over £77k per year. Splitting or having the business split across several avenues doesn't count anymore. It used to be allowed but got clamped down on a few years back, so unless your businesses are totally seperate ie different vehicles, different premises, non shared equipment etc then you are running the risk the Inland Revenue will see it as one CLEANING ENTITY and therefore hit you for enforced regististration and calculate how many years back you were running like this, and slap a bill on you accordingly.

We came close a few years back. Carpet cleaning was in my name - £60k, the window cleaning in my wifes - £58k. In fact we had different vehicles for the different businesses. The only thing that connected the 2 was husband/wife running cleaning services from the same address.  The new (and I must say far better accountant we changed to) picked up on this immiediately and warned us what would happen (as mentioned above) if somehow IR/HMRC got involved.

[Simon Gerrard]

Don't have exact figures as I 'm on a job but we spend  about £200 a week on advertising so a 7-1 return would be £1400 so yearly with holidays that would still be under the limit but this is very simplistic so is open to misunderstanding.

Would anyone else spend £200 to earn £1400? All within 4 miles of your front door, how much money are the people spending on fuel who work a 40 miles radious? I bet it's 3 times how much I spend...... This is why it's a bit more complicated than it first appears

Mike,
Surely the question is why after so many years do you need to spend SO much money on advertising. Surely you retain a fairly high percentage of jobs and so your advertising requirement to fill your diary should be getting smaller and if you are retaining customers and all the ones you advertisie for are in addition to your existing and growing customer base, then you must be turning over much more than the vat threshold.

Like Neil said, the rules on partnerships being formed to avoid vat have changed significantly with huge penalties for what is in effect tax avoidance.

Simon

[Kinver_Clean]

The VAT limit applies to the previous 12 months trading  not  the financial year, so can run from any month. There are various schemes where you pay a fixed percent of your turnover- usually less than 20%. I could never see the sense as it meant paying more than I was anyway and you stillhave to do your books properly.

I was registered as I had another business which folded and I did not bother to deregister. I found I was paying for nothing. To get to the stage of not paying tax when registered you would have to spend your entire turnover on taxed items so its not on.
The only advantage of being registered when you don't have to be is that you have to do your books every quarter.

[Mike Halliday]

Don't have exact figures as I 'm on a job but we spend  about £200 a week on advertising so a 7-1 return would be £1400 so yearly with holidays that would still be under the limit but this is very simplistic so is open to misunderstanding.

Would anyone else spend £200 to earn £1400? All within 4 miles of your front door, how much money are the people spending on fuel who work a 40 miles radious? I bet it's 3 times how much I spend...... This is why it's a bit more complicated than it first appears

Mike,
Surely the question is why after so many years do you need to spend SO much money on advertising. Surely you retain a fairly high percentage of jobs and so your advertising requirement to fill your diary should be getting smaller and if you are retaining customers and all the ones you advertisie for are in addition to your existing and growing customer base, then you must be turning over much more than the vat threshold.

Like Neil said, the rules on partnerships being formed to avoid vat have changed significantly with huge penalties for what is in effect tax avoidance.

Simon

Like i said i don't spend £200 a week on advertising i spend £200 a week on creating work just like some one who sits on his computer for 4 hrs a week contacting his past customers its the same cost ( actually £200 is less than the person sat at his computer) all my past customers get my leaflet every month so also act as a reminder card and my customers keep my leaflet and give it to friend & family so it also as as a recommendation card

like i said to just say £200 a week is very simplistic

ps you didn't answer my question, why after being so established for so long with all you massive data base of existing customer do you need to get work miles from your home perhaps you should follow my lead and keep it within 4 miles

[gwrightson]

Simon. WTF  ARE MY TAX AFFFAIRS AND BUSINESS GOT TO DO WITH YOU ? 1. Others use to run a similar business,  carpet cleaningand pressure washing                      being an example. What give you the rightto put my name on an open forum suggesting underhand dealing ? Stick to you own little shelterd little life you stupid man. Geoff

[Simon Gerrard]

Mike,
I don't work 40 miles away, far from it. We have lots of towns around us and have a website in each. Wigan- Bolton 8 miles Wigan -St Helens 7 miles Wigan - Warrington 10 miles. Wigan - Chorley 4 miles. The furthest we go it to the north side of Manchester but only go there for day jobs, or a group of jobs. So where you get your 40 miles from is beyond me.
We spend way less than £1,000 per YEAR in advertising because we've built a loyal customer base that wouldn't use anyone else (that's not unique to me btw)
The conventional business model for a carpet cleaning business is this:
When you first start out your advertising costs are high, but as time passes you retain a certain percentage of customers and gain new ones through referrals, because you do a fantastic job (also not unique to me). So if it took £800 per month in advertising to fill your diary in year one, it should be say £600 in year two etc etc, so that it is dropping as you build your customer base, so that your diary becomes filled with existing customers and the money you were spending on advertising turns into profit.

If you clean someones drive in the morning and do a carpet job in the afternoon, do you use the same van?

Simon

[Neil Williams]

  What's the vat threshold now, all I can see is that it's 77k. Is this correct?

  Also in laymans terms whats the difference between registering for vat and going voluntarily.

 Cheers mark.

Nice one Mark. All you had to do was put vat threshold into google and it would have brought this up http://www.hmrc.gov.uk/vat/start/introduction.htm along with numerous others.
Now the topic is turning into a battle ground

[gwrightson]

Yes Neil it is turning into a battle ground.

 what have I ever said to belittle or upset Simon is beyond me!!! ?

Why he has dragged my name into it ? I do not know .

I suggest he removes the post or alters it 

A very pis sed   of Geoff

[Paul Moss]

Got to say the best bit of advice i ever got was off Mike Halliday around 2003 and that was stick a pin in your local map and do a circle 5 mile radius and leaflet to them ongoing by the thousands.

Worked for me  

Got to agree with Simon though as each year goes I advertise less ( my biggest costs) and get work from existing customers  

[Mark Slaney]

  What's the vat threshold now, all I can see is that it's 77k. Is this correct?

  Also in laymans terms whats the difference between registering for vat and going voluntarily.

 Cheers mark.

  

Nice one Mark. All you had to do was put vat threshold into google and it would have brought this up http://www.hmrc.gov.uk/vat/start/introduction.htm along with numerous others.
Now the topic is turning into a battle ground

 I did Neil but was just a bit confused as i never thought the threshold was that high. Not so long ago it was only about 57k.

 My other confusion was with the registering/voluntary bit.

 It was a simple question looking for a simple answer which was what i got off Jim.

 Must be the weather  

[Jim_77]

Simon I think you made Geoff cross.

[Simon Gerrard]

Yes Neil it is turning into a battle ground.

 what have I ever said to belittle or upset Simon is beyond me!!! ?

Why he has dragged my name into it ? I do not know .

I suggest he removes the post or alters it  

A very pis sed   of Geoff

Geoff,
Apologies, I think you have totally misunderstood my point. I was looking on your website the other day, because you mention it on another post, I think and my point to mike was that you mix carpet cleaning with pressure washing all under one business, that was all. I will happily remove that if you wish, like I said, apologies.

Simon