[seandyer2003]

Lets not turn this into a debate of whether its worth going VAT reg etc, 

all i was wondering though is do you have to register for VAT when your turnover hits 67, 000?? Because i was working out what you might be earning with an employee full time and then my own wage and it is pretty close if not more than but i wouldn't want to put all my residential prices up 17.5 % so is it just a case of dont exceed it?? Or are there any legal ways round it??
Because what you turn over with staff and what you earn are miles apart..

Dont get me wrong i am not earning this at present! Alot more hard work before i ever get near it, but im just hypothesizing

[WCE]

Yes you do. Two options 1. Rent the employee the work 2. Start another wc business owned by your partner, then you work for her. She would be responsible for the tax on the "new" business they are really the only options for avoiding the vat. 

[Nathanael Jones]

There are ways to avoid it,.. you could handle the residential income and your wife could have the commercial income in her name, effectively splitting the business in half on paper. This can be a dodgy area though, as "artificial separation" is a term thrown about by the tax man sometimes,...

Still, I know ppl who do it, and who were told to do it by their accountant,...

[WCE]

There are ways to avoid it,.. you could handle the residential income and your wife could have the commercial income in her name, effectively splitting the business in half on paper. This can be a dodgy area though, as "artificial separation" is a term thrown about by the tax man sometimes,...

Still, I know ppl who do it, and who were told to do it by their accountant,...

You guys have it bad though in Ireland. The vat threshold is around half the amount here! Whats the rate over there?

[Moderator David@stives]

Sandy

There is no reason to avoid it, if you are successful enough to get to Vat level turnover , then you will be successful enough to go through the barrier, A barrier is all it is, think of it as crossing a bridge or a space shuttle breaking back through orbit.
Once you have done it , youve done it and you will think "where is the pain" but there is none.

You will find most of your customers will accept the increase or at least part of it.

When I did it, I couldnt believe how painless it was, the worry before hand was the worst part.

Since I went vat I have not looked back and my business has gone from strength to strength.

My advise to anyone is dont try to avoid it and dont let it hold you back.


I know of countless B&B's and other businesses who are purposely trading under the vat threshold, Saying comments like " I am not being an unpaid tax collector" etc. But that attitude is really holding them back, usually struggle to pay there window cleaning and are always moaning about something.

Dave

[ronnie paton]

you could go on the flat scheme, window cleaners dont have a great deal of purchases to claim vat back on.

Also ifr you do get commercial who you can charge vat you maek 6.5% do a small increase on residentil and the management company ones AND IT WILL EVEN ITS SELF OUT.

[seandyer2003]

you could go on the flat scheme, window cleaners dont have a great deal of purchases to claim vat back on.

Also ifr you do get commercial who you can charge vat you maek 6.5% do a small increase on residentil and the management company ones AND IT WILL EVEN ITS SELF OUT.

Does that mean you still charge residential ronnie???

[seandyer2003]

Yes you do. Two options 1. Rent the employee the work 2. Start another wc business owned by your partner, then you work for her. She would be responsible for the tax on the "new" business they are really the only options for avoiding the vat. 

Renting is no good becasue you would lose 1000's on what you get employing

[Moderator David@stives]

You still charge output at 17.5% even if you are on the flet rate scheme

[ronnie paton]

i would increase res a little but include the vat in the price.

Dave i know you still have to charge it but i would include the vat in the price i was chrging for example if i was charging £10 i would nt start chrging them £11.75 it would be come£10 inclusive of vat!

[WCE]

Yes you do. Two options 1. Rent the employee the work 2. Start another wc business owned by your partner, then you work for her. She would be responsible for the tax on the "new" business they are really the only options for avoiding the vat. 

Renting is no good because you would lose 1000's on what you get employing

Thats fair enough then  go for the second option if you are really worried about the vat. The guy could be an employee of the other business.   

[Moderator David@stives]

Ronnie

I put them all up, I just sent my wife round, she just told them due to our success we were now liable for vat, most of them were pleased for us.
This is one of the reasons you must build a quality customer base and leave the moaners behind.

We had a couple who said they didnt want an increase, so we left them the same price.

A couple of others we knew werent worth the hassle so we left them the same.

[seandyer2003]

Ronnie

I put them all up, I just sent my wife round, she just told them due to our success we were now liable for vat, most of them were pleased for us.
This is one of the reasons you must build a quality customer base and leave the moaners behind.

We had a couple who said they didnt want an increase, so we left them the same price.

A couple of others we knew werent worth the hassle so we left them the same.

surely by absorbing the cost you are losing 17.5 % or a bit less once you have claimed back vat yourself, but seems a waste for alot of hard work to lose 10-17.5% of profit to tax man, as well as the 40% you pay after 36ish 000

[seandyer2003]

Yes you do. Two options 1. Rent the employee the work 2. Start another wc business owned by your partner, then you work for her. She would be responsible for the tax on the "new" business they are really the only options for avoiding the vat. 

Renting is no good because you would lose 1000's on what you get employing

Thats fair enough then  go for the second option if you are really worried about the vat. The guy could be an employee of the other business.   

I know but its a bit thin to tell the taxman the two of you are running different businesses of the same kind from the same address, i read on the hmrc that if that is the case then you will definitely be classed as a partnership!

[seandyer2003]

You still charge output at 17.5% even if you are on the flet rate scheme

So what is flat scheme difference to just plain old vat registered??

[Moderator David@stives]

flat rate is an agreed % you pay the tax man , not what you charge the customer.

Say your turnover is

£100,000
vat on top £17,500
=£117,500

Minus the amount you can claim back say £5,000
on your purchases

This gives a difference of £12'500 you pay the vat man.

Using the same figures on the flat rate scheme, which is 10% for window cleaning, you still charge out the £17'500 in vat

But pay the tax man 10% of your turnover which will be £11'750


So the 17.5% route you pay  £12500
The flat rate way £11750.

The advantages of flat rate is simplified accounts.

These are not actual figures just guessed, each case is different and you could end up paying more or less each way

[davids3511]

Yes you do. Two options 1. Rent the employee the work 2. Start another wc business owned by your partner, then you work for her. She would be responsible for the tax on the "new" business they are really the only options for avoiding the vat. 

You got to be careful with that. HMRC could well consider them associated companies and bung them together to assess your VAT liability.

[poleman]

The VAT returns ever 3 months can be a pain, but what I did is went on the annul system! I pay a small flat fee by DD and at the end of the year my accountant just does one return, really easy

PS and I use this, to work out what vat I charge my customers
www.taxcentral.co.uk/taxcentral/home/vat/vatcalculator/default.asp

[ronnie paton]

yes the flat rate scheme is what you pay but yoy still charge 17.5, this can be included on the price of a job if wanted instead of putting on top.

If you have a £10 residential and you put it up a £1 before you go vat reg, then when you go reg you have your price has £11 inclusive instaed of plus 17.5 you will lose out on 21pence cause the vat will be £1.21. not alot to lose and if your in that position you must be doing well.