[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

[Paul Moss]

Simon I think you made Geoff cross.

Jim only went vat registered when he upgraded from the Sebo Duo 

[Paul Moss]

Oh and he went from Pink to Yellow Too, just to please Billy.

[gwrightson]

Simon, i accept  your apologies  , obviously i have mis read it some how ,
and yes i would find the line in question  been removed  the correct thing to do .
Thanks

A happier     Geoff

[Simon Gerrard]

Geoff,
Altered it for you.
Again aplogies if you misunderstood my point which was that it is difficult to justify having two businesses, one a sole trader and another a partnership merely for the purposes of avoiding vat when there are others, like you who carry out carpet cleaning / patio cleaning under a single business.
No insult was intended to you whatsoever, but again my sincerest apologies if you interpreted in that way.

Simon

[Mike Halliday]

Simon I saw your carpet cleaners manchester website i guessed it was about 40ish miles from wigan but why travel to manchester anyhow, you've cleaned in wigan for 30yrs how many people live with 4 miles of your front door? you must spend a fortune on fuel


 we can keep go on going backward & forward picking fault with each others business model but we both work differently I'm happy with how I do thing and I'm sure you are with how you run your business.

[Paul Moss]

Ok everybody STOP it now  :

[Mark Slaney]

  And everyone lived happily ever after 

[Glynn]

Simon, how sorry are you ?.

[dan paton]

lmao this is better than the telly at times

[Simon Gerrard]

Glyn
Gtf ubfec.
Which loosely translates into really really sorry.

[Steve Barnett (Carpet Care Plus)]

As I understand it, the only way to legally avoid vat is to set up 2 separate legal entities offering different services.

For example, I still supply and install carpets and flooring, so I can stay self-employed as a carpet cleaner and also be a Director of a limited company offering supply and fit packages.

This way both firms can trade under the vat threshold, or one can be vat registered and one not.

I stand to be corrected but I'm pretty sure this is the case.

I don't think the same rules apply to sole trader and partnership set-ups.

[Richard Basey-Fisher]

Paul i think its a bit off dragging poor old little billy small blower into this he wont be on tonight as monday is ironing day

[Paul Moss]

Richard, I did post at 5.15 and Tanya usually gives him his hour break between 5 & 6pm, poor lad must have been too tired. Unless Jim has taken his spandex over to be ironed 

[Billy Russell]

I think your all being very childish, i'm not going to rise to the bait tonight!!!!

and plus i've still got a basket and a half to do, Bl**dy Hell Jim, you could of at least washed your spandex first!!!!!

Paul/Richard, do you still require the Starch on your whitey tighties?

 

[Billy Russell]

Talk about off topic!! We've gone from The vat threshold to Jims spandex and Paul/Richards gayness!!!!!!!!!!!!!


 

[david washbrook]

When I brought out another carpet cleaning company back in February my accountant advised me to put it in a partnership with my partner to avoid vat

He said because I was buy an established business with its own van and equipment which had been running for 23 years then setting it up as a partnership was except able

Hope he is right or does anyone know differently

[John Kelly]

Dave, read what Steves put. One must be a limited company which is a standalone company and you are only an employee as a director. Having two partnerships or sole traders then you are liable for combined turnover.

By the way VAT isn't calculated on previous 12 months, far from it. If it appears at any time in the financial year that you are likely to exceed the threshold in that year you must register imediately.

[Neil Williams]

What you've said Steve is correct

As I understand it, the only way to legally avoid vat is to set up 2 separate legal entities offering different services.

For example, I still supply and install carpets and flooring, so I can stay self-employed as a carpet cleaner and also be a Director of a limited company offering supply and fit packages.

This way both firms can trade under the vat threshold, or one can be vat registered and one not.

I stand to be corrected but I'm pretty sure this is the case.

I don't think the same rules apply to sole trader and partnership set-ups.

[Brendan (chem2clean)]

Threshold here in Ireland is 37.500.its 13 1/2 vat

[Shaun_Ashmore]

The vat threshold is calculated on a running quarter it's tough to explain to mr.google should help, have you ever thought of the Flat rate scheme which is a half way house?

Shaun

[Neil Williams]

The flat rate scheme is nothing to do with the threshold for registration.
It's too late to go into all that

[jim mca]

John

Would having 2 Ltd companies both involved in cleaning not still be classed as tax avoidence unless they traded from different
addresses with own equipment and contact details

[david washbrook]

John I own the 1 company and me and my partner are partners in the other company both have there own vehicles and own bank accounts and equipment and buy their own chemicals is this still classed as vat avoidance

[Paul Heath]

The 'nice' vat man works out your turn over over a rolling 12 month period if at anytime this goes over the threshold then it's time to register. One advantage is you can claim back up to 5 or 3 (can't remember) years worth of purchase on your 1st return, but that is probably about the only time you will get anything out of them!
I would be very concerned about running 2 vans doing the same job from the same premises etc, like Steve said if you set up one as a ltd company, that then would be its own legal business, surely it would be an advantage to register for vat and group it all together, but you know your own business the best. I don't think they allow you to trade as 2 different business's offering the same service, thought they had closed that loophole, as Cameron needs all the money he can lay his hands on !

Billy re your ironing service.....my thongs had stains on them when you returned them...could you through some light on this please

[Steve Barnett (Carpet Care Plus)]

John I own the 1 company and me and my partner are partners in the other company both have there own vehicles and own bank accounts and equipment and buy their own chemicals is this still classed as vat avoidance

Dave, you could be in trouble with this - in both instances you are a self-employed individual, partnership or not, and you would be assessed for tax based on both companies combined profit - likewise with vat.

[John Kelly]

Dave as Steve says. One must be a limited company which is its own entity.

[William McCafferty]

You could of course franshise your business to delay when you have to pay vat, for instance you build your round up to a turnover of £70k you franshise this one out and take 20% from it in commssion.

You then start up another business and repeat.

You only have to now registered for vat when your commission reaches the vat threshold, if you then went on the flat rate scheme this would limit what you pay.

You should be able to get to 5 franshisees before you reach the vat limit.

[Steve Chapman]

I was told by my accountant that its possible to have a different limited company for each of your services and be a director of each, and that way each company is totally separate and has its own threshold for vat.

Not sure about doing it but he is a chartered accountant, so seems to be in the know.


Steve

[Steve Barnett (Carpet Care Plus)]

I was told by my accountant that its possible to have a different limited company for each of your services and be a director of each, and that way each company is totally separate and has its own threshold for vat.

Not sure about doing it but he is a chartered accountant, so seems to be in the know.


Steve

Not if they all operate from the same premises and use the same equipment Steve

[Simon Gerrard]

The best people to ask about this is HMRC, that way you can be sure you're operating legally.
The problem is if they catch up with you, and they will, they have sweeping powers and can back charge you all the vat, plus penalties because you could be breaking the law.  A sobering thought and one well worth a phone call.

Simon

[Steve Chapman]

Steve that's true, but not hard to have separate office addresses, and if it was a different service it wouldn't be difficult to separate the equipment or maybe lease the equipment from one company to the other 

Steve

[clarkson]

Hi Mark
 take a look at the flat scheme, its simpler to operate than the normal vat scheme and you will actually bebefit money wise from being on it.

 it only applies from vat threshhold to about 150,000 i think, ideal for you.

 cheers

john

[clarkson]

I was told by my accountant that its possible to have a different limited company for each of your services and be a director of each, and that way each company is totally separate and has its own threshold for vat.

Not sure about doing it but he is a chartered accountant, so seems to be in the know.


Steve

Not if they all operate from the same premises and use the same equipment Steve


hi steve
agreed, any connection really whether ltd. or not, i have tried every possible variation to split my domestic from commercial no go on all counts.

cheers

john

[Steve Chapman]

I think part of the key is having other people on the company as directors but minor share holders ( so they dont have the same say over running the business )  this way its a totally different business and legal entity and hmrc cant force you to combine it with another business.

its not unusual for business people to be directors on several companies, but still maintain a controlling share of each.

Just depends I guess whether you want to go down that route and have people you trust to be involved with it.



Steve

[david washbrook]

damn this I'm packing it in this is wat to complicated for me I called my accountant today but he is on holiday until next week

[peter maybury]

My accountant said I could do it your honour!


Peter
www.carpetcleanercardiff.com

[Helen]

My accountant said I could do it your honour!


Peter
www.carpetcleanercardiff.com

Not quite sure where you're going with that comment.
One thing is for sure, even if you have an accountant who collates and submits the figures for you, it is YOU and you alone who has to face the music if the proverbial happens.
You can blame your accountant as much as you like but you will find on the forms you need to sign for submission that YOU take full responsibility for the accurrancy of the forms.
Great work if you can get it being an accountant, charge an arm and a leg for putting together some figures but with ZERO responsibility.

[AshWhite]

I'm pretty sure that's the point Peter was trying to convey..

[Dave_Lee]

My accountant said I could do it your honour!


Peter
www.carpetcleanercardiff.com

Not quite sure where you're going with that comment.
One thing is for sure, even if you have an accountant who collates and submits the figures for you, it is YOU and you alone who has to face the music if the proverbial happens.
You can blame your accountant as much as you like but you will find on the forms you need to sign for submission that YOU take full responsibility for the accurrancy of the forms.
Great work if you can get it being an accountant, charge an arm and a leg for putting together some figures but with ZERO responsibility.

That's one reason I don't have an accountant, I don't see the point as a sole trader owner/operator. Tax forms and self assessment are so simple now. The common phrase about accountants saving you having to pay tax, doesn't add up to me. Finding out what you can can't claim for is easily done by checking out customs and revenue website. It only takes a little research.
Dave.

[Jim_77]

Dave, with the absolute utmost of respect to you, hasn't your recent PPI claim made you think about reconsidering your need for an accountant?  There are so many things that could be claimed for that we probably would never think about.

I never used an accountant up until about 4 years ago, and when I did they went back through my old books and claimed a load back for me - the tax man paid ME a few years ago!!

I do my own VAT, but in addition to the SA savings they also advised me I had historically under claimed for VAT and got me a whacking great rebate on that too.

[Kev Martin]

The only worry for most people is that they will have to charge all their customers VAT and that for most people is a problem.   Well I look at it like this! It is a tax that affects us all and once you are comfortable with this it pays to register for VAT even if you have not reached the threshold. Immediately you register you can claim all the VAT back on expenditure for capital equipment, tools, training and professional expenses. Then from then on in all VAT on everything to do with your business.  A lot of clients see you as more credible as well.

Kev Martin
Marblelife Ltd

[clive ware]

Except for Mrs. Smith who`s through lounge has gone from £75 to £90!

[Kev Martin]

Except for Mrs. Smith who`s through lounge has gone from £75 to £90!

My first sentence answers your response.  Think small and you will stay small.  You care about Mrs Smith but Tesco, Boots, Debenhams, Her local restaurant, her garage, her petrol station etc etc etc don't!  Only You!!!  VAT is a part of life and it is here to stay!

Kev Martin
Marblelife Ltd

[*Hector*]

True Kevin... however Mrs Smith then goes to Hector's Carpet Cleaning Services who do not charge VAT.... Shame really as she has been a regular customer for 5 years, but cannot see why she should pay an extra £15 for the same job......

just sayin like 

[Kev Martin]

True Kevin... however Mrs Smith then goes to Hector's Carpet Cleaning Services who do not charge VAT.... Shame really as she has been a regular customer for 5 years, but cannot see why she should pay an extra £15 for the same job......

just sayin like 

OK I will agree with that point as well!  But, think about it if you have calculated your charges for Mrs Smith Correctly it works something like the following and I will take advice here because I know nowt about Carpet Cleaning and I don't pretend to but lets say you worked on

Truckmount Allowance £5
Fuel to Get there £7
Chemicals and other Mats £15
Labour  £48

This above is all guesswork but it is how we reach a price to do Natural Stone Cleaning & Restoration

You could reduce your price to Mrs Smith to £69 + Vat which is a total of £82.80 and still be earning the same money and she only has to swallow a £7.80 increase!  Are you telling me you are going to lose a good customer for the sake of less than £8?

Kev Martin
Marblelife Ltd

[Carpet Dawg]

Stick to tiling Kev 

[Dave_Lee]

Dave, with the absolute utmost of respect to you, hasn't your recent PPI claim made you think about reconsidering your need for an accountant?  There are so many things that could be claimed for that we probably would never think about.

I never used an accountant up until about 4 years ago, and when I did they went back through my old books and claimed a load back for me - the tax man paid ME a few years ago!!

I do my own VAT, but in addition to the SA savings they also advised me I had historically under claimed for VAT and got me a whacking great rebate on that too.

It's all just a matter of opinion isn't it Jim.
Ive had accountants in the past. They never claimed anything more for me against tax than I do myself now, in fact I claim more.
It was me that had to tell my first accountant (who worked for a prestigeous firm) that I could offset my first (part time) losses against tax paid, during the last few years as an employee.
Sure I can understand having an accountant when things are less straightforward or complicated, but I don't have anything like that.
Dave.

[clive ware]

Kev, the only thing I really care about is that Mrs Smith may not pay a 20 quid increase in her cleaning bill!

[Jim_77]

Dave, fair point mate.  I think you might be an exception to the rule, in that you actually understand how tax works... I know I don't have the capacity for it, along with many others I suspect!  For me, £300 ish a year is a reasonable price to pay to have someone else do it for me.


Regarding the VAT... Hector & Clive you are really missing something here.

If you're not VAT registered you are paying more for your overheads and expenses because you can't claim back the VAT on them.

Therefore if you charge £75 non-VAT for a job you'll be making less profit than charging £70 plus VAT

So therefore your charge would have to be more or less the £90 inc VAT price anyway, to make up the difference

[Mike Halliday]

Jim I'm trying to work out if you are right but I can't see it...


if I charge a £1000 i will need to charge an extra £200 if vat reg'd..... so the customers pays £1200, if the customer is willing to pay £1200 I can charge that and earn an extra £200

if I  spend a £1000 a week i would pay £200 vat...... so if I was vat reg'd i would need to spend a £1000 every week to get my money back or more  if I wanted to be better off.

I can't see see any scenario that you are better off being vat reg'd unless you have made some very big purchases

I might be wrong be I can't see it

[Neil Williams]

Jim, I think you are refering to the full Vat scheme with your example.
I'm on the flat rate scheme so although I charge the customer 20% I only pay 15% of that vat to the vat man, therefore making 5%. But with this scheme I can't claim back vat on everyday purchases other than capital items over £3k I think.
Life's too short to do the calculation but I think in my case there isn't much difference in being full or flat rate.

[Jim_77]

Neil, yes you're right that's the full VAT scheme I'm talking about.  I don't think the flat rate is advantageous to anyone except HMRC tbh

Mike,

if the customer is willing to pay £1200 I can charge that and earn an extra £200

Mike that's exactly what I was driving at!  Your 1200 non-vat will put you maybe slightly more profitable than 1200 inc vat... 1000 non-vat puts someone worse off, they haven't accounted for their higher overheads having to pay VAT!

In your case Mike I'm guessing your biggest outlay is leaflets which, if I'm remembering correctly do not attract VAT?  You might have quite an out of the ordinary business model here, which indeed may be significantly better not registered for VAT as the majority of your purchasing does not include VAT, therefore not much to claim back. 

However for others, especially growing businesses who are re-investing heavily and maybe have a profit margin of 30% or even 20%, it may well be beneficial.

[Doctor Carpet (Ret'd)]

Jim, I think you are refering to the full Vat scheme with your example.
I'm on the flat rate scheme so although I charge the customer 20% I only pay 15% of that vat to the vat man, therefore making 5%. But with this scheme I can't claim back vat on everyday purchases other than capital items over £3k I think.
Life's too short to do the calculation but I think in my case there isn't much difference in being full or flat rate.

Neil
My rate is 12% but thats maybe because you and I have a slightly different mix of services we offer.

The 8% difference works in my favour at my t/o levels to reflect the fact I cannot set-off my input vat.

Perhaps the biggest advantage of the flat rate scheme is that you only pay vat from your cash-flow ie. vat only becomes liable once you have banked your takings, With the normal vat rate you have to pay the vat on debtors which can have severe repercussions if you have a large amount of debtors at the end of the quarter/slow payers.

Rog

[Shaun_Ashmore]

I think what Clive is trying to say is that its harder to sell or at least the up take is lesser with a 20% increase compared to your competitor.

Shaun

[Doctor Carpet (Ret'd)]

One way of course is to simply absorb the vat rather than charge it-but of course this'll mean a 20& decrease in your profits maximum, depending upon how many clients you make this offer to.

And on that note, for those who are above the vat threshold, which of you quote to a domestic client as £x+vat and how many quote £y (which is a price including the vat, but not specified at the quote stage)? I prefer to quote £x + vat so that if I get into a "haggle" I can offer to discount the vat part-but only for the first time I work for the client. And yes they can still pay me by cheque or on-line banking. Cash is only one option.

Rog

[Andrew Briscoe]

I am the same as Roger, i quote the amount plus vat, have found some forget when it is time to settle up, never been a problem though.

I was one of the sceptical ones when i registered, however i cant remember losing a job because of it, get your mind set right and it wont be a problem.

It was our contract cleaning division that pushed us through it, so most is commercial and they prefer to deal with vat registered companies.

Having 4 vans on the road adds up to a lot of vat, through purchasing, fuel, servicing and tyres etc, yet we still often pay out 9k in vat every quarter, not a cheque i like to write out,     on the other hand, we have between 3k-9k of vat sitting in account making a little money and helping with cashflow 

Andrew

[Craigp]

****I am the same as Roger, i quote the amount plus vat, have found some forget when it is time to settle up, never been a problem though.*****

Awww, that must cause bad feeling.

I thought the law says domestic you must give price including VAT. But on commercial you can give it excluding VAT  or have I got that wrong?

[John Kelly]

Roger, you can do cash accounting on the standard scheme as well. The VAT doesn't become payable until the invoice has been paid. Godsend for us as we used to have to pay the vat on our flood work invoices which sometimes took 12 months to be paid.

[Andrew Briscoe]

****I am the same as Roger, i quote the amount plus vat, have found some forget when it is time to settle up, never been a problem though.*****

Awww, that must cause bad feeling.

I thought the law says domestic you must give price including VAT. But on commercial you can give it excluding VAT  or have I got that wrong?

Nope, not when they get their quote out, or the copy we have 

[Kev Martin]

Stick to tiling Kev 

We don't do tiling mate

But we make money and both businesses are VAT Registered;D

Kev

[*Hector*]

touche