Clean It Up
UK Window Cleaning Forum => Window Cleaning Forum => Topic started by: Crystal-clear on November 03, 2013, 08:48:08 pm
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If you are on Flat rate 12% you charge 20% which commercials don't mind paying as they claim it back anyway so 8% is yours?
So the trick is if you are expanding make sure you have a good amount of commercials with so the loss on the domestics it can somewhat almost be off setted with the 8%+ on the commercials?
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I am interested to hear what will be said on this one!
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I'm not VAT, but my understanding of the system is, you charge 20% , but DON'T claim any vat back! So I guess you need to calculate if the 8% covers what you pay out.
Rob.
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any one thats vat registered is a pleb ;D
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Chanster how do you work that one out. I'm no pleb but am vat reg as I earn above, I think it use to be £49,000 so had to go vat I think it's 70,000 now not sure don't really take much notice. I can understand not going vat if you handle loads of cash with domestic but 98% of my work is commercial there for they are invoices which goes through our books and earn way over the vat limit. I gotta say its works better for us as we claim back on fuel, which we do alot of like most prob. Also loads of cleaning stuff. When I price jobs I quote the job and tell the client plus vat which they don't care they claim back every 3 months as we do when we send off our vat we deduct our 20% cost of vat and send on what we owe. I've got a new transit custom on lease which is paid for by our company as its tax deductible and we claim vat back so costing us nothing therefore who's the pleb ?
It's 20% you pay as what we charge.
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Danny thanks for your input , you could also go on flat rate which is something like 11% then 12% after the first year you can not claim vat back but looks like you get to keep the difference if this is the case it looks like in the long term it makes sence to concentrate on commercial so if you are going to go vat your commercials won't have a problem paying it and you make an extra 8%! So vat flat rate will also take the edge away from the higher tax bracket correct me if I'm wrong !
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VAT can be a double edge sword depending on how your work is spread between residential and commercial.
If you have mostly residential then you will lose out, it will take a lot of commercial to be added before you begin to make up the losses.
I hate it but its a necessary evil. I have looked a splitting the company into two but that wont work as I have so much residential both companies would have to register. This year has been our best year for taking on new commercial but still we will lose out.
In my opinion there is very little you can do other than accept it, take it on the chin and accept the fact your profit from each residential job will be less once you register.
Either put your prices up or find ways to cut costs.
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No probs Crystal yes that's correct Neil in what your saying. If you are residential no need to reg as vat as most of cash goes in your pocket and don't think cysts will be to pleased if you had to charge them vat I'm sure most will look for other cheaper windys crystal not heard of flat rate vat I charge the going rate 20% and pay it deducting my expenses
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No probs Crystal yes that's correct Neil in what your saying. If you are residential no need to reg as vat as most of cash goes in your pocket and don't think cysts will be to pleased if you had to charge them vat I'm sure most will look for other cheaper windys crystal not heard of flat rate vat I charge the going rate 20% and pay it deducting my expenses
I don't think that is what Neil meant! :o
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Just wanted to point out if you understand a lil bit about vat, weare cash accounting which means if we give out 150 invoices say and 50 of them pay we will only pay the vat to customs & exercise on the ones that have paid, even if they havnt paid for 3 months they have to wait till we get our money. What Neil's saying basically its no good being vat reg if you do residential but you have no choice with commercial if you go over the fresh hold Degreeeeee 😀
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So Neal you take the hit on the domestic side but it makes up for it with the commercials as you are on flat rate? And you are hoping to gain more commercials to keep making the extra 8%?
Danny speak to an accountant flat rate could be the best option as we don't need to constantly buy things in window cleaning so flat rate seems the best
Can someone just confirm that I'm on the ball with this flat rate lark it is an 8% + right;)?
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So Neal you take the hit on the domestic side but it makes up for it with the commercials as you are on flat rate? And you are hoping to gain more commercials to keep making the extra 8%?
Danny speak to an accountant flat rate could be the best option as we don't need to constantly buy things in window cleaning so flat rate seems the best
Can someone just confirm that I'm on the ball with this flat rate lark it is an 8% + right;)?
With flat rate you pay 12% of your turnover to the VAT man. Not 12% of what you invoice.
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So Neal you take the hit on the domestic side but it makes up for it with the commercials as you are on flat rate? And you are hoping to gain more commercials to keep making the extra 8%?
Danny speak to an accountant flat rate could be the best option as we don't need to constantly buy things in window cleaning so flat rate seems the best
Can someone just confirm that I'm on the ball with this flat rate lark it is an 8% + right;)?
Yes but you charge 20% to customers right hence 8% profit ?
With flat rate you pay 12% of your turnover to the VAT man. Not 12% of what you invoice.
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Cheers Crystal I will have to look into that one thanks for info
Would I then charge 20% to the custome but only pay 12% to Custom & Excise is that correct as never heard or been informed about that
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Cheers Crystal I will have to look into that one thanks for info
Would I then charge 20% to the custome but only pay 12% to Custom & Excise is that correct as never heard or been informed about that
(http://Cheers Crystal I will have to look into that one thanks for info
Would I then charge 20% to the custome but only pay 12% to Custom & Excise is that correct as never heard or been informed about that)
See here http://www.hmrc.gov.uk/vat/managing/returns-accounts/flat-rate-returns.htm - essentially the vat rate is calculated per industry, you don't claim back vat on purchases (but you can on capital expenditure). It makes sense for a business that doesn't manufacture or retail physical goods, so most service businesses.
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Yes danny it could be more profitable for you,
Still looking for that 3 letter word so I'm right in simple terms it basically works out an 8% (aprox) increase
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Yes danny it could be more profitable for you,
Still looking for that 3 letter word so I'm right in simple terms it basically works out an 8% (aprox) increase
If he is selling to VAT registered businesses he is better off as he is. VAT registered should only worry those that are mostly domestic. Businesses claim the VAT back.
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Yes danny it could be more profitable for you,
Still looking for that 3 letter word so I'm right in simple terms it basically works out an 8% (aprox) increase
If he is selling to VAT registered businesses he is better off as he is. VAT registered should only worry those that are mostly domestic. Businesses claim the VAT back.
And then he makes 8% on flat rate right;?
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Pmsl !!! Now I'm sooooo confused, thanks for all the input Crystal you still not sure and am still awaiting YES your right lol !!! I can't see how I can charge business's 20% and only pay back 12% they will clock on I'm stealing 8% of there revenue if I'm charging business's 20%. It doesn't cost me as I charge the business's vat so they pay and I earn as I claim back on my fuel and other items of vat I pay for the company ie van & cleaning materials as we so a fair bit of cleaning and gardening.
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turnover less than 150k and youre elidgible for flat rate vat.
you charge 20% vat to customer.
You pay 12% of the TOTAL invoice amount inc vat to HMRC but you DO NOT claim the vat back that you pay out.
£100 invoice
+ 20% vat
£120 total.
Pay £14.40 to hmrc
this leaves the remainder of £5.60 to cover any vat you may have paid out.
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AJ can you go on flat rate if your on cash accounting & Ltd Company, you were right about flare rate Crystal 😀I do claim a fair bit on fuel & the lease van every month plus other stuff which I wouldn't be able to AJ so not sure if I would benefit it ?
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Id speak to your accountant about it, as each company is individual.
Unless your turnover says you have to or you are trying to target larger commercials, who prefer vat regd companies, its not really worth it, you may earn a little out of it but nothing major.
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Just looked onto . Gov thanks for posting it thru Dominic, g looks like alot of hassle as my wife does all the vat and my accountant does our Books. Mind you saying that we went ltd in October last year 2012 and we take a wage each and have to do our tax deducts on line so don't know what he will be doing ? My son is self employed so he needs my accountant as we pay him monthly and accountant sorts him out
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Thanks for you info to AJ yes don't think it would be worth it I may be slightly better off some months and some months not depends what we claim back. When I first started I had to volunteer to go vat as I did alot of Commercial and they wanted me to be vat, but we've built up the company and would have had to go vat as we passed the vat fresh hold.
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Thanks for you info to AJ yes don't think it would be worth it I may be slightly better off some months and some months not depends what we claim back. When I first started I had to volunteer to go vat as I did alot of Commercial and they wanted me to be vat, but we've built up the company and would have had to go vat as we passed the vat fresh hold.
Well done AJ bit of topic how did you gain so much commercial
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Crystal did your dad John use to have this company as I new the fella John & Dave but Dave died many years ago !!! If it is the Crystal clear I knew I use to help them out when they rented apart of an office in Actuals removal & window cleaning company I use to work for !!!!
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Crystal did your dad John use to have this company as I new the fella John & Dave but Dave died many years ago !!! If it is the Crystal clear I knew I use to help them out when they rented apart of an office in Actuals removal & window cleaning company I use to work for !!!!
No mate I'm just a sole trader ;Dcrystal clear is quite a popular trading name a couple of others similar on the forum!
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I have been on the flat rate for several years now and it just makes it nice and simple at the end of the quarter to just total up all income (domestic & commercial ) and pay 12% to hmrc. £25000 income £3000 vat bill.
You will have to confirm this with an accountant but if you make any large purchases - van for example (over £2000 I think) you can still claim the vat back on these large purchases & deduct it from your vat bill in the following quarter.
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I've seen a few comments lately on how to stay under vat, and splitting your business concerns is a dodgy area.
Some necessary lecturing first: Under VAT rules, the obligation to register is with the person and not with the business. That means in practice that where a person operates more than one business, they all fall within the same VAT registration, regardless of how minor or distinct those businesses may be.
The following is useful guidance when a single business is split into more than one businesses - each one owned by different persons (e.g. each business is run by a different spouse). Usually people do that to avoid having to register for VAT (e.g. because turnover from each separate business activity is below the VAT registration threshold). Or, for purely commercial reasons, e.g. when the business sells to unregistered customers who cannot reclaim VAT.
As you may have guessed, the VAT-man doesn’t like that and they have given themselves the powers to stop it. The VAT-man is more likely to succeed if the persons carrying out those business activities, in the words of the vatman have “close financial, economic and organizational links”. Read my lips: To avoid being caught, the business owners need to prove that the reason for the disaggregation is commercial considerations and not vat avoidance.
Here are some examples, resulting from court cases down the years, where a number of persons carrying out separate business activities have been treated as one person for VAT purposes and required to register for VAT as a single person:
One person is the “controlling mind” of all business activities.
No involvement in each other’s business.
No financial inter-dependence of any sort between the two businesses.
Any finance to buy a business comes from the owner and not from the owner of the other business.
Each party must have their own business insurance.
Each party must have their own, independently charged, overheads (rent, rates, utility bills).
The public’s perception of the business must be of two different businesses.
The different entities do not use the same equipment.
The existence of separate bank accounts and accounting records.
The reason for keeping the businesses separate is a commercial one and not because of tax avoidance.
Pretty inconsistent and conflicting the court decisions have been though, so one cannot be always sure that any steps are tax-proof. Where the VAT-man directs that the all persons be treated as carrying on a single business, such direction cannot be retrospective (this could be useful to avoid VAT registration for a while until HMTC spots the arrangement). Having said that, please bear in mind that they also have powers to order registration for day one if they can show (!) that the businesses were in fact never separate!
Graham