[Glynn]

Sorry Mike I dont understand what you mean.

[M.Acorn]

He is saying that`s how much he told the tax man he earned  :

[Mike Halliday]

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

[Neil Williams]

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

[Mike Halliday]

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

[elliott cleaning]

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

[jasonl]

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.)

[robert meldrum]

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

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.

[MAX Carpets]

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.

[Karen Waterworth]

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?

[Doug Holloway]

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

[robert meldrum]

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.

[Karen Waterworth]

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.

[robert meldrum]

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.

[Doug Holloway]

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

[richie]

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.

[mark_roberts]

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??

[Matt Lindus]

Sorry Mike I dont understand what you mean.

http://
 

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 

[Kinver_Clean]

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 )

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

[Kinver_Clean]

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