[absolutecleaning]

There are ways round it but you would have to be very careful

http://customs.hmrc.gov.uk/channelsPortalWebApp/channelsPortalWebApp.portal?_nfpb=true&_pageLabel=pageExcise_ShowContent&id=HMCE_CL_000086&propertyType=document#P556_61743

[Paul Coleman]

Probably the most effective way around it is if running a genuine franchise scheme.
Strictly speaking, this is not a workaround though as they are separate businesses even if the franchisee is paying royalties to the franchiser.

[Sean Dyer]

Probably the most effective way around it is if running a genuine franchise scheme.
Strictly speaking, this is not a workaround though as they are separate businesses even if the franchisee is paying royalties to the franchiser.

This is about the only decent way out i see, unless you just take the leap and cope with it, other ways would be to genuinely sub contract the work, but you lose alot of control and personal touch with customers, so franchising wins there as you get to say how the business is run, but is it the right way, as if not the franchisee is getting stuffed

Its a hard one.... But it needs tackling if you wish to grow to a business that will support you not working...or if you are looking to bring in a much higher wage than sole trading

[Nick Wareham]

Have seen clients of ours set up two Ltd company businesses, 1 for commercial, 1 for domestic to keep the domestic work VAT free.

The current penalty for doing this is that the vat man comes round to your house with a meat cleaver and chops your balls off.

They are up to all these tricks, dont do it!

[clarkson]

 Hi
  just to confirm. you can not put a seperate window cleaning business in your wifes name its called an arms lengh deal.

  The two limited company idea is interesting on paper you should be able to do it as they are legal seperate entities. However although they do not explain why you cant! customs wont let you.

 Our friend here suggesting you dont declare 30 000 of income for awhile is running a very high risk especially mentioning it on a public forum. It is of course upto you but the penalties and stress when this comes to light in my opinion is not worth it.

 you say 'we' in your post if you have a business partner you of course could quite legitimitely form another company and split the turnover.

 lastly if you go vat registered you  should defo use the flat rate scheme. it will save you money and make life simple for awhile.

 cheers

 john
 

[Neil Gornall]

Think about vat when your actual(not declared) turnover is getting to £100k or more,and then flat rate it. You have 2 choices here and thats, be a dilgent unpaid tax collector for the treasury or a shrewd businman that realises the current vat threshold is too low and stifling your efforts to expand and employ and thereby handicapping your true worth to the economy.Many,many accountants think they work for the treasury,find one that works for you.How are you supposed to pay the vat due when you havn`t even been paid yourself?,its a full time job nearly just sorting it out. Try de-registering if you have a downturn/lose a few employees etc.,another nightmare. If you look closely at your money you`ll find theres probably only a couple of days a week where you earn money you get to keep,well make that maybe one day if you vat register at £70k. If this dilemma ever comes my way i`ll sell and compact. Vat register and you WILL know what cash-flow problems are all about. if you are at this dilemma then do whatever is neccesary to avoid vat,use different umbrellas to keep individual turnovers down,consolidate it if you must when you get to £150k turnover and then you are in the ballpark for vat.
               I talk to accountants informally,just go and ask one what they think of the threshold at 70k and your next extra  pound  turnover gives you a £14k liability,alright £8.4k at flat rate. A 20 percent increase of cost to customers because of vat !,your customers are waiting to be hoovered up by the non vat man. No problem at all some will tell you,in fact some will say double your prices and if you dont lose half of them you are better off.Real world says "NO".
                                     Lets say you were able to hide turnover so that when you did register you were not going to be worse off. So 68k appx. turnover becomes 84 k appx. turnover following year and you register. Basically you should not be worse off on paper ,though the bookeeping bill has just gone up 5k a year or do it yourself. Very soon you cannot find time to clean windows,everything you have strived for is in the hands of others.Yet all problems come to you,so delegate but then that guy wants a pay rise. You are now trapped in red tape and bureacracy,your part-time book-keeper is on 26 weeks maternity leave. How can the vat man want £4837 when i only have £937 in the bank and 2 van lease payments due, and he is going to fine me if its not paid this week? All this is manageable but you need to leap to £150k turnover to justify putting up with it and seeing something left at the end,maybe.
                                  Now some people may revel in this and enjoy the local chamber of commerce meetings etc but it wouldn`t be for me and it  requires   dedication and levels of energy i don`t currently have,which is why i am typing this and having a lazy morning though at least i am feeling a bit guilty about it. Time to get the slippers off and go do the £48 scheduled today or tommorrow,push fridays £112 to next week for synchronisation purposes. Thats how i will justify it !

You dont have to worry about paying VAT if you have not been paid, This problem was what put many companies out of busines so it has been dealt with.
I choose to pay on income recieved not turnover, its up to you which way you prefer.

[mikecam]

No I dont HAVE to charge VAT, if i choose to absorb the VAT its my choice, however I HAVE to pay it.

LOL !!! You'll absorb and pay what you aint charging? No matter what way you dress it up your final bill will include an element of VAT whether you break it down or you don't. You'll just be charging less before VAT.

[gordonswindows]

Sean

Wrong wrong wrong and wrong

Avoid tax and you will caught and pay a hefty fine avoid paying the vat and you may be put behind bars

To avoid the threshold will be t rested as an offence and the rest of your clever business ideas only go to show how limited your knowledge is

The vat is an addition to your cash-flow not a drain

You don't pass the vat payment on until you have received it from your client and better still you get an extra month to pay ie vat due for sales Nov Dec Jan does not need to ne paid until last day of Feb

Vat registration will add value to your business as the other reputable firms will prefer to do business with you opposed to the firms that "avoid" paying

Gordon

[Sapphire Window Cleaning]

Sean

Wrong wrong wrong and wrong

Avoid tax and you will caught and pay a hefty fine avoid paying the vat and you may be put behind bars

To avoid the threshold will be t rested as an offence and the rest of your clever business ideas only go to show how limited your knowledge is

The vat is an addition to your cash-flow not a drain

You don't pass the vat payment on until you have received it from your client and better still you get an extra month to pay ie vat due for sales Nov Dec Jan does not need to ne paid until last day of Feb

Vat registration will add value to your business as the other reputable firms will prefer to do business with you opposed to the firms that "avoid" paying

Gordon



this only adds value as the commercial customers can claim the VAT back themselves.
Given the economic climate as it is, its much safer to gain residential customers than commercial, there are businesses all over the UK still going under.
It was only last year someone on here lost a very large contract, I think it was worth £50K



Matt

[Nameless Drudge]

One thing my knowledge is not and thats limited.

I`m talking domestic window cleaning and if you can show me a domestic customer attracted by your vat no. and extra 20 percent i will eat my hat.
            
 Cash flow is cash flow the vat content should never be counted in though and thats a glaring error from you  and thats where it is so easy to slip up. What if you need cash wise what you have taken in thats due to hmrc?,you are stumped,its a loan or dip into savings,easy mistakes are made.
         Vat registering when dealing with commercial customers is a different ball game altogether and ought to make no impact whatsoever on net profit though you are indeed an unpaid tax collector.

 Go on then,tell me what the hell you do when you go from 69,999 to 70k and need to be in vat if you are domestic,whats your advice to the poor soul this occurs to?
          The taxman expects you to be trousering a percentage of your income un-declared in the window cleaning trade. If you want to be really smart you clumsily let these monies come to light if you are subject to an investigation and pay the extra tax due with what you have really trousered,even back 6 years or 10.

[Nameless Drudge]

I might add that my sister is a senior tax inspector for HMRC.

Heres one bit of good advice,owing the tax man is not too bad if your cash flow is bad as the interest they charge is small,avoid the late return charges though. Speak to them straightaway. As long as you clear your debt(they will structure affordable payments for you) before more tax is due they will be absolutely fine and helpful. It is only when they think you are accruing debt that they will enforce recovery and if you are then you are up the creek anyway.
             My excuse for not paying the last chunk i owed was quite simply"I know its very very naughty but i took the family on holiday using your money and can i have a repayment plan please as your interest rates are very competitive". I was thanked for my honesty and told not to use this as an excuse again.

One more fact,my younger brother whilst going through university 12 years ago got a summer job at the revenue answering the phone.At least 60 calls a day were people reporting there neighbours,enemies etc. for alleged tax evasion. As long as you are ready for them there is no need for concern. Pre-emption is the key,i will be delighted when the taxman reveals all the extras i should have been claiming and offers me a refund.

[Nameless Drudge]

I dont want to sound smug and reading my posts i think it might be coming across that way. What i really mean is dont rush to get locked into vat and forward plan with advice,I saw my father age 10 years with a vat inspection and he is as honest as they come.When the vat man arrives though you are guilty until proven innocent.Another BIG tip,take out the insurance cover available for accountancy costs in light of an investigation,the accountancy fees alone can finish you,let the accountant if he is a good one deal with it all as costs are covered. Its a great insurance deal for a change.

[Griffus]

Sean

Wrong wrong wrong and wrong

Avoid tax and you will caught and pay a hefty fine avoid paying the vat and you may be put behind bars

To avoid the threshold will be t rested as an offence and the rest of your clever business ideas only go to show how limited your knowledge is

The vat is an addition to your cash-flow not a drain

You don't pass the vat payment on until you have received it from your client and better still you get an extra month to pay ie vat due for sales Nov Dec Jan does not need to ne paid until last day of Feb

Vat registration will add value to your business as the other reputable firms will prefer to do business with you opposed to the firms that "avoid" paying

Gordon

Gordon, VAT is calculated and paid on invoiced totals regardless of payment received. This is unless you use cash accounting, only then is VAT calculated / payable on actual monies received and offset against that actually paid out.

[gordonswindows]

Thanks for the responses guys

Ian our accountant deals with it so we must be on the second option you described

Sean I sympathise with the torment your father endured as that is exactly what my wife and I experienced last year. We had a visit from the taxman vatman and the PAYE/NI and it is a shock.

Your advice about the accountants insurance is excellent and I totally agree although the large bill we encurred from our accountants excellent support and negotiating skills is worth every penny, at least it is tax deductible

Matt what a good memory for detail you have yes we did lose clients and yes it is difficult however every experience can be learned from. Domestic customers are probably more difficult I agree and I apologise for forgetting that we don't all do commercial but the upside of commercial is win win

The real issue of vat registration is not about reaching the threshold amount it is when you suspect that you may reach the limit that you have to register

Sean is right the taxman sorry person will listen and is flexible towards repayment however you may find the vat person a different cup of tea

On a more positive note to finish I congratulate you domestic guys who have achieved the amounts required to feel the need to register for vat, that is a lot of houses gates and collecting

This thread should be on the front of business magazines to show the success of the sole trader and small business person during these difficult trading times, we are the backbone of the country

Gordon