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UK Floor Cleaning Forum => Carpet Cleaning Forum => Topic started by: waynebarry on May 14, 2010, 04:48:45 pm

Title: Are you V.A.T Regestered
Post by: waynebarry on May 14, 2010, 04:48:45 pm
Ive been adviced to go VAT registered, do you include the VAT in the price you give the customer or do you add it at the end?
Title: Re: Are you V.A.T Regestered
Post by: adimarsh on May 14, 2010, 05:01:44 pm
What is the advantage of being VAT registered to your business? If no advantage why give yourself the headache.
Title: Re: Are you V.A.T Regestered
Post by: derek west on May 14, 2010, 05:19:37 pm
good luck with this one wayne.

90% on here are fully booked and charge £100 an hour. lets see how many say there vat registered, ;D ;D ;D

adi, its not about advantages mate, if you should be you should be, its the law.
Title: Re: Are you V.A.T Regestered
Post by: Joe H on May 14, 2010, 05:29:40 pm
Begs the question to Wayne then........

why were you advised to get VAT registered.

if its just for being VAT registered sake, then I agree with Adi
Its been said on here in the past, if you do mostly commercial work, you business is perceived to be more successful if you are VAT registered.

If you hit the turnover threshold, then I agree with Derek

Title: Re: Are you V.A.T Regestered
Post by: Dave_Lee on May 14, 2010, 05:55:50 pm
I had to go vat registered years ago when Insurance work took me right through the threshold. I de-registered at the earliest opportunity and have no intentions of re registering. Obviously if you turn over more than £68,000, then you have to register. I know someone who registered simply to get around £7,000 vat back that had been charged on new equipment, he too has now de-registered, after having to repay vat on the equipment at current value.
If you are after commercial work, then it is an advantage to be vat registered, as many wont consider you, unless you are. I only do commercial if it happens to come along, I don't chase it.
Dave.
Title: Re: Are you V.A.T Regestered
Post by: MAX Carpets on May 14, 2010, 06:09:16 pm
VAT Registered, its the law! Makes know difference, and you get a bit back from the likes of YP !!

Dave,

Did you get the wand?
Title: Re: Are you V.A.T Regestered
Post by: Nigel_W on May 14, 2010, 06:27:20 pm
Yes I am V.A.T. registered. There is only one good reason to do it and that is that your turnover is going to be some way over £68000. If I had turnover of £75000 I would work less hard and stay out of the VAT scheme.

When I verbally quote I always mention the net price first and then mention the V.A.T. It feels better to me this way because I am separating out the part of the price that I do not receive. My written quotes also break out the net,VAT and gross price.

It really irritates me that I have to charge an extra 17.5% on my prices to residential clients. The system seems grossly unfair. Surely we should all have to charge VAT regardless of turnover :o

If you take the scenario of  two competing owner operators.

Company A has sales of £67,000 and does not charge V.A.T.
Company B has sales of £80,000 and charges V.A.T.

On a £235 job company B has to take only £200 (after VAT deduction) or charge his client an extra £41 in VAT. Either way this does not seem fair to Company B especially when you take into account the additional administration.

I wonder if Georgie Osborne has spotted this opportunity??

Nigel
Title: Re: Are you V.A.T Regestered
Post by: adimarsh on May 14, 2010, 06:31:12 pm
good luck with this one wayne.

90% on here are fully booked and charge £100 an hour. lets see how many say there vat registered, ;D ;D ;D

adi, its not about advantages mate, if you should be you should be, its the law.

I know it's the law Derek, but there's a point at which it becomes advantages i.e. claiming it back. My point was that filling in the varius forms and making sure your VAT returns are in on time adds to the stress level. If the business does not have that high a turnover then why bother. Perhaps I'll just keep my mouth shut on this one.
Title: Re: Are you V.A.T Regestered
Post by: colin thomas on May 14, 2010, 06:42:07 pm
wish i had never gone down the vat route,

 :(
Title: Re: Are you V.A.T Regestered
Post by: Simon Gerrard on May 14, 2010, 06:47:28 pm
Wayne,

There is no 'advised' about it. If your turnover is over £70,000 then you have to register for vat. Like Nigel says, it's not worth it if you're just over threshold as the addition of vat to your prices will give you a competitive disadvantage. Plus, your books have to be immaculate, you have all the extra grief of completing a vat return every quarter and the ever present threat of a vat inspection, where, if they find you have claimed for things you are not entitled to they can back charge you add interest from the day you made the mistake. The only advantage is the ability to reclaim the vat content on your business purchases, but you will always end up paying them - guaranteed.
VAT is something to be avoided until it becomes unavoidable. :'(

Simon
Title: Re: Are you V.A.T Regestered
Post by: Andrew Briscoe on May 14, 2010, 07:01:28 pm
I am vat reg, and i too worried about it when i registered 5 year ago,
but to be honest, most people expect to pay it nowadays, as it is on everything.
Dont think i have lost a job because of it, ok, well maybe a few, but its usually
the custy who wants their whole house done for 80 quid, and i dont want these custies.

I have just been comparing last 1/4 to same time last year, and this 1/4 57% was
commercial. So dosnt really effect me

I quote the same as Nigel-W, i say 50+ the vat, sometimes make a joke about it,
apologise and say i am an unpaid collector of taxes, seems to work.

At end of day it works out at £280/day over 48 weeks, i only take a week off.  ::)
plenty on here often mention the big jobs, they must do nowt for the rest of the week  ;)

Andrew,

ps i did a survey a while ago, on ccdo, think 2 thirds where registered.
Title: Re: Are you V.A.T Regestered
Post by: steve cardy on May 14, 2010, 07:06:23 pm
I agree with every thing that simon says. Why be an unpaid tax collector for the govt unless you have to be. One thing to remember is that whatever the thresshold for vat is it isnt based on your financial year but works on a rolling
basis so if you have a cracking 6 months of your year at the end and a great start to your next financial year if that added togeather puts you over the limit you have to register.
Title: Re: Are you V.A.T Regestered
Post by: MAX Carpets on May 14, 2010, 08:31:42 pm
Surely we are all aiming to T/O over more than £68K???
Title: Re: Are you V.A.T Regestered
Post by: Nigel_W on May 14, 2010, 09:09:01 pm
I think you would be surprised Emclean. The Vat threshold of 68k seems to be a glass ceiling on the earnings of many carpet cleaners. They can't be bothered with the hassle of VAT  and if they charged 17.5% more to residential customers there business model wouldn't work as easily.

Nigel
Title: Re: Are you V.A.T Regestered
Post by: waynebarry on May 14, 2010, 09:10:52 pm
Hi Guys thanks for your replys.
The new VAT limit is £70k and I have exceded it, Ive done 50% domestic & £50% commercial but its a mixture of Carpet cleaning, Window cleaning & gutter Cleaning.
I really want to push the carpet cleaning more this year as I enjoy it the most, I have two employees working for me so its becoming more & more difficult to stay under the bracket hence why asking the question if its affected you guys at all when you had to go registered especially where the domestic customers are concerned?
Business growing pains, its so stressfull!!
Title: Re: Are you V.A.T Regestered
Post by: MAX Carpets on May 14, 2010, 09:19:29 pm
People accept it, as I said its the law! Plus, it takes about 10mins to fill out return. No pain, no gain!
Title: Re: Are you V.A.T Regestered
Post by: Adam P on May 14, 2010, 09:27:57 pm
wayneberry: i heard you have to go VAT registered as soon as you think you'll hit the threshold, not after it so if you're getting close get VAT registered asap.

Nigel_W : think of it like this, you've been given 70k free of no vat so that you can compete with the competition. if everyone had to charge vat regardless of turnover, then the little guy would have very little to offer the customers, and would struggle to get any work. this would lead to just big companies running everything and it's impossible to change.
Title: Re: Are you V.A.T Regestered
Post by: John Kelly on May 14, 2010, 11:40:17 pm
Easy way round it. Have 2 seperate companies. 1 sole trader 1 limited. Perfectly legal only problem you'll have higher accountancy fees for limited company. This way neither may reach vat threshold.
Title: Re: Are you V.A.T Regestered
Post by: Joe H on May 15, 2010, 05:35:50 am
Emclean
The law also says if you do not turn over more then a certain amount (£70k at the moment) then you do not need to register but can if you want.

In the past I have taken steps (steps not breaking the law) to avoid the need to register.
Why?
I am happy at the level of earnings which is below the threshold - nothing wrong with that at all.
99% of my work is domestic and I dont want to hit the client with a 17.5% tax hike.
Also, I dont want to get involved in the detail of the paperwork when you are VAT registered. I dont like being an unpaid pen pusher for any government dept (but do it when legally reqd to do so).


Cant understand why someone should say all businesses should be VAT registered. Peculiar.
Title: Re: Are you V.A.T Regestered
Post by: MAX Carpets on May 15, 2010, 06:21:22 am
Joe

Sorry, I meant it is law if you T/O the required amount. Paper work involved is minimal really. We try to use it to our advantage, printed on our quotes we have "As we are a bonafide, VAT registered company, all prices are subject to VAT at the current rate of 17.5%"

Justin
Title: Re: Are you V.A.T Regestered
Post by: Mike Halliday on May 15, 2010, 07:25:58 am
if we are saying that most customer will accept an extra 17.5% amount  on their bill without minding why don't we all right now put our prices up by that amount.

if we are slightly below the vat threshold then this would give us an extra £11900 a year, which unfortunately would take us over the threshold.......... but instead we could take an extra 6 weeks paid holiday every year and still be earning the same amount

we also need to remember that some carpet cleaner are not totally honest so if the threshold is £70K then they will be really earning £85K as some cash jobs will be going in the back pocket.
Title: Re: Are you V.A.T Regestered
Post by: robert meldrum on May 15, 2010, 08:41:23 am
if we are saying that most customer will accept an extra 17.5% amount  on their bill without minding why don't we all right now put our prices up by that amount.

if we are slightly below the vat threshold then this would give us an extra £11900 a year, which unfortunately would take us over the threshold.......... but instead we could take an extra 6 weeks paid holiday every year and still be earning the same amount

we also need to remember that some carpet cleaner are not totally honest so if the threshold is £70K then they will be really earning £85K as some cash jobs will be going in the back pocket.


Reality !
Title: Re: Are you V.A.T Regestered
Post by: peter maybury on May 15, 2010, 12:11:43 pm
I trade over the threshold and accept v.a.t. as a fact of life. The paperwork is not much more and a lot of people make far too much of it. I too try to sell the benefits of being a legitimate business. Many people who have expensive homes and furnishings (costing more than the v.a.t. threshold) think further than saving the cost of the v.a.t and feel securer knowing that they are dealing with a v.a.t. registered organisation.
It is totally impossible to quote on a lot of the commercial work unless you have the credibility of being v.a.t. registered and we would not have the range of equipment we have without the turnover that we have.  I accept that we have to be v.a.t. registered but feel it a more positive than negative situation. Customers are more likely to pay somebody £100 + v.a.t rather than £117.50.

Peter
www.carpetcleanercardiff.com (http://www.carpetcleanercardiff.com)
Title: Re: Are you V.A.T Regestered
Post by: MAX Carpets on May 15, 2010, 01:12:38 pm
It has never been a problem, in fact 9 times out of 10 people say "Is that plus VAT?"
Title: Re: Are you V.A.T Regestered
Post by: Adam P on May 15, 2010, 01:15:38 pm
Cant understand why someone should say all businesses should be VAT registered. Peculiar.

i think he was saying it would be better if everyone was vat registered so that then there is no disadvantage for businesses when they start to grow, making it a bit more even for businesses
Title: Re: Are you V.A.T Regestered
Post by: JandS on May 15, 2010, 01:18:03 pm
So paying VAT makes you legitimate.

John
Title: Re: Are you V.A.T Regestered
Post by: derek west on May 15, 2010, 01:25:41 pm
don't think i'll be vat registered till year 4 which is annoying as i can't claim vat back on my original equipment, :'( :'( :'(
Title: Re: Are you V.A.T Regestered
Post by: Nigel_W on May 15, 2010, 01:33:13 pm
Cant understand why someone should say all businesses should be VAT registered. Peculiar.

i think he was saying it would be better if everyone was vat registered so that then there is no disadvantage for businesses when they start to grow, making it a bit more even for businesses

Thank you - that is exactly what I meant. Not peculiar is it?

Nigel
Title: Re: Are you V.A.T Regestered
Post by: Dave_Lee on May 15, 2010, 02:12:49 pm

Dave,

Did you get the wand?

Not yet, probably turn up on Monday.
I am happy staying under the vat threshold. If I was 15 years younger I would probably want to T?O more, but with my state pension due next year....
Dave.
Title: Re: Are you V.A.T Regestered
Post by: Joe H on May 15, 2010, 02:18:01 pm
Cant understand why someone should say all businesses should be VAT registered. Peculiar.

i think he was saying it would be better if everyone was vat registered so that then there is no disadvantage for businesses when they start to grow, making it a bit more even for businesses

Thank you - that is exactly what I meant. Not peculiar is it?

Nigel

I would rather it be no one pays VAT.

Hardly likely to happen though
Title: Re: Are you V.A.T Regestered
Post by: peter maybury on May 15, 2010, 05:41:44 pm
Being v.a.t. registered does set you apart from the people who trade part time and uninsured etc. It  gives people who are concerned about the horror stories of what can happen in this industry, confidence to do business with you.  The threshold is not a great deal of money and a lot of people would be suspicious of any business not achieving that amount of turnover. Certainly people living in the higher end of the market who are expecting to pay a decent figure for a professional service would see it as something to be expected.
There are certainly few industries that are able to operate below the v.a.t. threshold.
Peter
www.carpetcleanercardiff.com (http://www.carpetcleanercardiff.com)
Title: Re: Are you V.A.T Regestered
Post by: Joe H on May 15, 2010, 06:23:10 pm
How many do you have working along with you Peter. Or are you solo.
Title: Re: Are you V.A.T Regestered
Post by: Mike Halliday on May 15, 2010, 06:28:03 pm
peter there is so much rubbish in that statement I don't know were to start Basically you are giving your opinion as though it was fact

Being v.a.t. registered does set you apart from the people who trade part time and uninsured etc...no it doesn't.... so people who are not VAT regs don't have insurance  ::)

[it  gives people who are concerned about the horror stories of what can happen in this industry, confidence to do business with you. ][/i]..no it doesn't... for one thing people often agree to do business with you before price (and the inclusion off vat) is even mentioned

a lot of people would be suspicious of any business not achieving that amount of turnover how do they know what  turnover you have?

I think your sweeping statement  insults every person on this board who is not Vt reg'd



Title: Re: Are you V.A.T Regestered
Post by: Mike Halliday on May 15, 2010, 06:52:09 pm
just had a bath and stewed over this issue some more ;D ;D

another thing....

its been suggested in this topic that being VAt reg'd gives some sort of credibility and sets you apart from other companies who will not be seen as more professional.

when does this happen? because from what I can gather until you actually start talking price the potential customer doesn't know if you charge VAT or not. that is unless your  leaflet, YP advert, website, newspaper advert etc..etc says...... "WE CHARGE VAT ON OUR PRICES".....   


 I've seen a lot of advertising and I can say I've never seen that sentence included.

if you do a professional presentation on your quotes most customers will have decided to use you before price is mentioned.

 if at that this point the mention of VAT influences their decision  it will be to not  use your services, rather than the opposite
Title: Re: Are you V.A.T Regestered
Post by: derek west on May 15, 2010, 07:07:12 pm
mike
this one made me cringe

quote
Customers are more likely to pay somebody £100 + v.a.t rather than £117.50


shouldn't it read.....
customers are more likely to pay £100+vat rather than £100.... in which case, errr no they wouldn't
Title: Re: Are you V.A.T Regestered
Post by: Glynn on May 15, 2010, 07:12:57 pm
Mike
Surely you must be vat reg ?, given the amount of leaflets you put out and your considerable time in the business.
Title: Re: Are you V.A.T Regestered
Post by: Mike Halliday on May 15, 2010, 07:21:11 pm
Glynn, i personally only earned approx  £28k in the last year so I'm nowhere near the threshold
Title: Re: Are you V.A.T Regestered
Post by: Carpet Dawg on May 15, 2010, 07:27:24 pm
peter there is so much rubbish in that statement I don't know were to start Basically you are giving your opinion as though it was fact

Being v.a.t. registered does set you apart from the people who trade part time and uninsured etc...no it doesn't.... so people who are not VAT regs don't have insurance  ::)

[it  gives people who are concerned about the horror stories of what can happen in this industry, confidence to do business with you. ][/i]..no it doesn't... for one thing people often agree to do business with you before price (and the inclusion off vat) is even mentioned

a lot of people would be suspicious of any business not achieving that amount of turnover how do they know what  turnover you have?

I think your sweeping statement  insults every person on this board who is not Vt reg'd





Here here...

And this nonsense about "commercial's not touching you if your not vat reg??!?!?" where does this idea come from? Have I been dreaming about the amount of commercials i have been doing lately then?

Like some have said, i take steps to stay below the threshold.
Title: Re: Are you V.A.T Regestered
Post by: Glynn on May 15, 2010, 07:33:06 pm
Mike,
It's nothing to do with earnings, it's turnover.
Title: Re: Are you V.A.T Regestered
Post by: Mike Halliday on May 15, 2010, 07:37:24 pm
sorry Glynn i should have been clearer, I personally have a turnover of approx £28k
Title: Re: Are you V.A.T Regestered
Post by: Glynn on May 15, 2010, 07:43:06 pm
Sorry Mike I dont understand what you mean. ???
Title: Re: Are you V.A.T Regestered
Post by: M.Acorn on May 15, 2010, 07:51:07 pm
He is saying that`s how much he told the tax man he earned  ::)
Title: Re: Are you V.A.T Regestered
Post by: Mike Halliday on May 15, 2010, 08:07:10 pm
no that is the gross amount of money I took in the last year and yes that what i informed the taxman because I runs a legitimate business and declare my  gross & net to the tax office, to do any otherwise would be illegal
Title: Re: Are you V.A.T Regestered
Post by: Neil Williams on May 15, 2010, 08:32:18 pm
Sorry Mike I dont understand what you mean. ???

Don't ask me how some people get away with it, but I think he is one of those who has various business names and business types so that 'his' business only turns over £28k.

As I don't know the ins and outs of his business/es I won't comment.
All I will say is that we tried having one cleaning business in my wifes name and another in mine. The accountant wasn't convinced that if we had a 'visit' that they could decide these were one and the same, therefore calculating backwards until both combined businesses fell below the Vat threshold at any given point. This meant we could have ended up with a vat bill going back a few years. (even though ofcourse we hadn't charged vat).
We therefore went Vat registered.

Quite clearly different accountants see things differently, as do numerous carpet cleaners with some of the boasted figures that appear on here, who somehow aren't vat registered ;D
Title: Re: Are you V.A.T Regestered
Post by: Mike Halliday on May 15, 2010, 09:05:42 pm
Sorry Mike I dont understand what you mean. ???

Don't ask me how some people get away with it, but I think he is one of those who has various business names and business types so that 'his' business only turns over £28k.

As I don't know the ins and outs of his business/es I won't comment.
 

Niel do you seen the irony of your comment?

this is going slightly off topic but why do people assume that people split their companies or have multiple companies as some sort of fiddle like they are doing it to pay less tax or keep below their VAT threshold.

perhaps they do it to protect there assets in case of their death or perhaps they are entrepreneurs who take calculated risks  but need to safeguard there existing business perhaps they are not married but want to provide for their partners in case of any unforeseen incidents, what about divorce how would you all handle your wife claiming half your business, do you want your children to take over your business & company name, what about company or personal debt and liability etc..etc

there are 100s of different ways to organise your business and its not just about fiddling

Title: Re: Are you V.A.T Regestered
Post by: elliott cleaning on May 15, 2010, 09:10:57 pm
Glad to see Mike is also switched on.  Creative accounting is not just something you hear & read about - it's a practicality many businesses should take advantage of
Title: Re: Are you V.A.T Regestered
Post by: jasonl on May 15, 2010, 09:13:10 pm
I have been VAT registered , and I have not been , I prefer not to be .

We are in such a high Gross profit business there should not be any need , whilst still being able to earn a great living.

If I spend £58.75 on diesel and I am vat registered  I can claim back 8.75 in vat , plus 10.00 off my income tax bill =18.75

Yet if I am not VAT registered I can claim back  nearly 12.00 from my income tax bill.

BUT ,, I would have had to charge my customers an extra 17.5% ( or in my case charge the customer more and keep it for me not the VAT people.)
Title: Re: Are you V.A.T Regestered
Post by: robert meldrum on May 15, 2010, 09:14:10 pm
Being v.a.t. registered does set you apart from the people who trade part time and uninsured etc. It  gives people who are concerned about the horror stories of what can happen in this industry, confidence to do business with you.  The threshold is not a great deal of money and a lot of people would be suspicious of any business not achieving that amount of turnover. Certainly people living in the higher end of the market who are expecting to pay a decent figure for a professional service would see it as something to be expected.
There are certainly few industries that are able to operate below the v.a.t. threshold.
Peter
www.carpetcleanercardiff.com (http://www.carpetcleanercardiff.com)

That is absolute nonesense.............

Although I've occasionally been asked if a quote includes VAT it has NEVER been an issue and I have worked in many commercial establishments as well as dealing with many extremely wealthy individuals. In every case it was ME they hired NOT the image I set out to project. Whether with OTT advertising or giving the impression I was bigger than I actually was.

It's put about as if the customer GAINS from dealing with a VAT registered operator which they DON'T so don't imagine you will gain business or credibility through being VAT registered. It's just a liability which you can learn to work around but not on an open forum.
Title: Re: Are you V.A.T Regestered
Post by: MAX Carpets on May 16, 2010, 09:06:45 am
Ok, so my coment has upset a few people??? I will explain, by putting " we are a bonafide VAT registered co blah blah..." It gives a reason for customers to pay the extra 17.5% without question, not to make us look big or to make us look better, toys back in the prams now please.
Title: Re: Are you V.A.T Regestered
Post by: Karen Waterworth on May 16, 2010, 10:07:49 am
Just putting my two pennith in, Over the years I have come to the conclusion that all business should be Vat reg. Why because if all businesses charge Vat as the norm, it would put all companies on a level playing field, but the Vat % must be dropped to a single figure i.e. 8% that way more money would go into the communal pot and before you say more paper work, and dead lines yes there is. But as a business you should be running your books up to date at all times, why would you not?  It is easy to sit down at the end of the week and update your records when it is still in your mind than waiting until you have to submit your records to Mr Tax man and stressing that you can not find this and that purchase invoice.
We all moan about the people that put the leaflets though the doors saying 3 carpets cleaned for £50.00 ok we have an idea what this cleaner will do? If they were Vat reg then they would have to by law quote a firm price and not up the cost when they get there. This by nature may stop them printing the leaflet with these unrealistic prices in the first place.
And as for splitting your business up as to avoid the Vat limit BAD idea, yes it can be done, yes people do it. Now that the government needs more money in the pot, what do you think they will do?  They may employ more inland rev inspectors to look at peoples names and cross ref to address and then if it looks like you have done that, they have the power to back date the vat and tax due up to 5 years. Is it really worth the risk?
Title: Re: Are you V.A.T Regestered
Post by: Doug Holloway on May 16, 2010, 10:30:49 am
Hi Guys

Vat is an administrative nightmare and a friend of mine , now sadly departed, who was a senior principal in the Customs Vat office, said to me privately on a number of occaisions that they would like to see the VAT threshold significantly increased, but the governement has to balance revenue with cost of collecting.

It would be completely impractical and unworkable to make every business register for VAT.

Cheers

Doug

Title: Re: Are you V.A.T Regestered
Post by: robert meldrum on May 16, 2010, 11:35:04 am
Ideals are fine for youngsters or those who lack self confidence and imagine anything that appears to level the playing field is good !

As previous posts have suggested .............learn how to manage your business to maximise your return ( what goes in your pocket ) Simply recording every penny in / out is NOT how to do it.
Understand exactly WHAT is a claimable expense / business cost / WHEN to make purchases / HOW to write down / write off / SET ASIDE redundant machinery.

Have you never wondered why there are so many ancient redundant machines around farms....ask your accountant!

VAT is one of the worst things the UK public has had forced on them from joining the EEC which has become a monsterous control freak light years away from the original TRADING PARTNERSHIP set up.
Title: Re: Are you V.A.T Regestered
Post by: Karen Waterworth on May 16, 2010, 12:00:54 pm
Look the government will look at very possible thing they can to collect vast amounts of money of all of us that work. plus cuts all over the place.
Doug impractical it would be, I agree. But what government does not operate in a practical way? You can see them now, departments merging less people working harder.  
Possible way they may make all business Vat reg is = Vat and Tax departments merge all info under one roof. All companies submit Tax returns, at the same time the Vat is calculated once per year. Results we get stung with not only an increased Tax bill but also a Vat bill Plus NIC. :( 
I hope and pray I am wrong but what other way will they find you can bet they will not upset the big companies. You know the ones just look next time our PM is on telly he will plug an ad for them.
Title: Re: Are you V.A.T Regestered
Post by: robert meldrum on May 16, 2010, 12:27:01 pm
Understand your suggestions Karen but as long as VAT is a separate tax and a business can show they are below the level requiring registration I would suggest they continue to operate outwith VAT registration. Any attempt to merge VAT with Inland Revenue would be a nightmare and not likely to happen.

As the SMALL BUSINESS sector is providing more jobs annually and contributing to the UK's faltering economy it's unlikely any government will penalise small businesses.

You can only be pursued by VAT inspectors if you have traded above the threshold and failed to register............the objective therefore is to stay below the threshold by using your common sense and learning the rules.
Title: Re: Are you V.A.T Regestered
Post by: Doug Holloway on May 16, 2010, 03:25:12 pm
Hi Guys

Karen, I agree that the goverment will look at all ways of increasing revenue but I am pretty sure they cannot merge VAT and income tax.

VAT is a purchase tax on the value of a service/product and is governed by EU law, wheras Income Tax is based on profit.

Cheers

Doug
Title: Re: Are you V.A.T Regestered
Post by: richie on May 16, 2010, 04:02:30 pm
I guess that the VAT thing is something that will always be debated as a good thing for some but a bad thing for others.  Your accountant (if a good one) will direct you onto the best path for you & your business. 

One thing i will say,  i know someone thats a tax inspector and hears what is going on with both the tax & VAT side of things.  Both have already started to clamp down & investigate companies that they believe dont declare everything & or run under seperate companies to keep out of the VAT threashold & for tax purposes.  If caught out you can expect a hefty penalty and or possible imprisonment. 

Richie.
Title: Re: Are you V.A.T Regestered
Post by: mark_roberts on May 17, 2010, 12:12:37 pm
Go and see your accountant as a lot of what has been said is rubbish.

Also consider the flat rate scheme where you paid the gov 10% and keep the 7.5% to offset your vat output.  You can only claim vat back on purchases over £2k.

Mike - can you explain how your accounting system works to be so busy but not charge vat.  You can PM me if you wish.

As someone said you really want to be breaking through the vat barrier rather than triping over it and dont do what I did and not realise you went over the limit until December as you will be fined as I was.

Mark

PS. John - is this still possible to have two businesses under the one name one being vat reg the other not??
Title: Re: Are you V.A.T Regestered
Post by: Matt Lindus on May 17, 2010, 03:33:39 pm
Sorry Mike I dont understand what you mean. ???

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Yes you do Glynn, he means that his whole enterprise takes no more than £28K. He probably pays tax on 18-20K, so pays around 3k per year in tax and NI combined.
20K net is a commendable wage for a sole trader in this current climate.
It’s nice to see Mike is honest on this forum, unlike the other crap I have read on here.



Matt 
Title: Re: Are you V.A.T Regestered
Post by: Kinver_Clean on May 17, 2010, 04:53:18 pm
I have been registered in other businesses and this carried over to cleaning.
It has only one advantage as I see it--- You have to get your books straight every 3 months.
I always quoted an all-in price to domestics and since I deregistered I have not altered the prices, instant 17.5% payrise.

If you register you can claim the vat back on all equipment you have bought inc vans. I don't think there is a time limit. I claimed it for a van that was 6 years old, for the second time, having 'bought' it back then registering again.

If you have to register get a proper accounting program not just bookeeping.
This will do your vat return in 1/2 hour.(Not counting the entries each night when you get home- which of course you all do anyway, don't you ;D)

Don't forget more small businesses go belly up because of poor or non existing account systems than any other reason.

Thank goodness I'm nearly retired.

Trevor
Title: Re: Are you V.A.T Regestered
Post by: Kinver_Clean on May 17, 2010, 05:03:18 pm
PS   I belong to the Fed of Small Businesses and their latest mag says that most businesses should steer clear of flat rate schemes as they pay over the odds in tax. You have to enter all receipts and invoices anyway so why not get as much back as possible?

trevor
Title: Re: Are you V.A.T Regestered
Post by: John Kelly on May 17, 2010, 05:07:54 pm
Mark, not sure if having the exact same name apart from limited on the end would be sensible. Not sure if its allowed. However my accountant has one business with his full name and the other just the initials.
We did this for years. The cost of equipment, office etc was just split proportionately between the two.
Title: Re: Are you V.A.T Regestered
Post by: jasonl on May 17, 2010, 08:15:14 pm
Chem dry had us doing this for for a few years , some stll do it ,, run one franchise for commercial ,and another for domestic, in the end it was too much hassle , a few people got cayght and fined and hit with some big back tax bills.
Title: Re: Are you V.A.T Regestered
Post by: John Kelly on May 18, 2010, 11:33:53 pm
As long as one is a limited company which is a totally seperate entity in its own right and the other is a sole trader its perfectly legal.
Title: Re: Are you V.A.T Regestered
Post by: Karen Waterworth on May 19, 2010, 07:58:09 am
As long as one is a limited company which is a totally seperate entity in its own right and the other is a sole trader its perfectly legal.

John is right but, to spell it out and be clear you needed to point out "seperate entity" = one of the businesses needs to be not carpet cleaning and or nothing that you can clean with the equipment you use for carpet cleaning. ie one of your businesses is car selling and the other is carpet cleaning.
Title: Re: Are you V.A.T Regestered
Post by: John Kelly on May 19, 2010, 08:01:56 am
No Karen, it can be. We did this for years. Our accountant does it and we checked with the inland revenue at the time.
A limited company is a wholly seperate beast and even though you may be the main shareholder in law you are only an employee of that company. That company has no bearing on any other business activities you undertake as a sole trader.
Title: Re: Are you V.A.T Registered
Post by: Hilton on May 19, 2010, 09:00:51 am
Lets get this straight,

There is nothing illegal about legally trying to pay as little tax as possible.

If you split your business in to a hundred different entities then thats entirely up to you so long as you do not break any laws.

Big business and the wealthy do this all the time, they afford to pay the right people to take care of this for them.

The Chem-Dry example above is ridiculous and they should have been held to account not the franchisee if they have acted under instruction from the franchisor. Its obvious if you have one named business carrying out similar work that you can not split in into two as domestic and commercial.

As already mentioned, just go Ltd with one if its in the same industry or if you want to own and run twenty business's doing diffirent things then thats perfectly fine as well.
Title: Re: Are you V.A.T Regestered
Post by: Helen on May 19, 2010, 12:37:12 pm
PS   I belong to the Fed of Small Businesses and their latest mag says that most businesses should steer clear of flat rate schemes as they pay over the odds in tax. You have to enter all receipts and invoices anyway so why not get as much back as possible?

trevor
With some industries that would be true, but within the cleaning industry where overheads etc etc can be kept to a minimum then the flat rate scheme is ok. Of course you have to take into account how close you are to the "full" vat threshold, as to whether you would benefit from either scheme. :)
Title: Re: Are you V.A.T Regestered
Post by: Helen on May 19, 2010, 12:40:37 pm
No Karen, it can be. We did this for years. Our accountant does it and we checked with the inland revenue at the time.
A limited company is a wholly seperate beast and even though you may be the main shareholder in law you are only an employee of that company. That company has no bearing on any other business activities you undertake as a sole trader.

Hi John, you have worded this as if in the past. Do you still operate this way now. If so have you checked with thr IR lateley. Just wondering, cos if you are and did, then it would clear a lot of "grey" areas up for us :)
Title: Re: Are you V.A.T Regestered
Post by: John Kelly on May 19, 2010, 03:52:52 pm
We don't do that now as we no longer do carpet cleaning. Have a read of this and do some searching on the net. What I have found is that customs have won some and lost some. Also they can only register you for vat from the date of the direction and not back date it.

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