[Kev Martin]

The only worry for most people is that they will have to charge all their customers VAT and that for most people is a problem.   Well I look at it like this! It is a tax that affects us all and once you are comfortable with this it pays to register for VAT even if you have not reached the threshold. Immediately you register you can claim all the VAT back on expenditure for capital equipment, tools, training and professional expenses. Then from then on in all VAT on everything to do with your business.  A lot of clients see you as more credible as well.

Kev Martin
Marblelife Ltd

[clive ware]

Except for Mrs. Smith who`s through lounge has gone from £75 to £90!

[Kev Martin]

Except for Mrs. Smith who`s through lounge has gone from £75 to £90!

My first sentence answers your response.  Think small and you will stay small.  You care about Mrs Smith but Tesco, Boots, Debenhams, Her local restaurant, her garage, her petrol station etc etc etc don't!  Only You!!!  VAT is a part of life and it is here to stay!

Kev Martin
Marblelife Ltd

[*Hector*]

True Kevin... however Mrs Smith then goes to Hector's Carpet Cleaning Services who do not charge VAT.... Shame really as she has been a regular customer for 5 years, but cannot see why she should pay an extra £15 for the same job......

just sayin like 

[Kev Martin]

True Kevin... however Mrs Smith then goes to Hector's Carpet Cleaning Services who do not charge VAT.... Shame really as she has been a regular customer for 5 years, but cannot see why she should pay an extra £15 for the same job......

just sayin like 

OK I will agree with that point as well!  But, think about it if you have calculated your charges for Mrs Smith Correctly it works something like the following and I will take advice here because I know nowt about Carpet Cleaning and I don't pretend to but lets say you worked on

Truckmount Allowance £5
Fuel to Get there £7
Chemicals and other Mats £15
Labour  £48

This above is all guesswork but it is how we reach a price to do Natural Stone Cleaning & Restoration

You could reduce your price to Mrs Smith to £69 + Vat which is a total of £82.80 and still be earning the same money and she only has to swallow a £7.80 increase!  Are you telling me you are going to lose a good customer for the sake of less than £8?

Kev Martin
Marblelife Ltd

[Carpet Dawg]

Stick to tiling Kev 

[Dave_Lee]

Dave, with the absolute utmost of respect to you, hasn't your recent PPI claim made you think about reconsidering your need for an accountant?  There are so many things that could be claimed for that we probably would never think about.

I never used an accountant up until about 4 years ago, and when I did they went back through my old books and claimed a load back for me - the tax man paid ME a few years ago!!

I do my own VAT, but in addition to the SA savings they also advised me I had historically under claimed for VAT and got me a whacking great rebate on that too.

It's all just a matter of opinion isn't it Jim.
Ive had accountants in the past. They never claimed anything more for me against tax than I do myself now, in fact I claim more.
It was me that had to tell my first accountant (who worked for a prestigeous firm) that I could offset my first (part time) losses against tax paid, during the last few years as an employee.
Sure I can understand having an accountant when things are less straightforward or complicated, but I don't have anything like that.
Dave.

[clive ware]

Kev, the only thing I really care about is that Mrs Smith may not pay a 20 quid increase in her cleaning bill!

[Jim_77]

Dave, fair point mate.  I think you might be an exception to the rule, in that you actually understand how tax works... I know I don't have the capacity for it, along with many others I suspect!  For me, £300 ish a year is a reasonable price to pay to have someone else do it for me.


Regarding the VAT... Hector & Clive you are really missing something here.

If you're not VAT registered you are paying more for your overheads and expenses because you can't claim back the VAT on them.

Therefore if you charge £75 non-VAT for a job you'll be making less profit than charging £70 plus VAT

So therefore your charge would have to be more or less the £90 inc VAT price anyway, to make up the difference

[Mike Halliday]

Jim I'm trying to work out if you are right but I can't see it...


if I charge a £1000 i will need to charge an extra £200 if vat reg'd..... so the customers pays £1200, if the customer is willing to pay £1200 I can charge that and earn an extra £200

if I  spend a £1000 a week i would pay £200 vat...... so if I was vat reg'd i would need to spend a £1000 every week to get my money back or more  if I wanted to be better off.

I can't see see any scenario that you are better off being vat reg'd unless you have made some very big purchases

I might be wrong be I can't see it

[Neil Williams]

Jim, I think you are refering to the full Vat scheme with your example.
I'm on the flat rate scheme so although I charge the customer 20% I only pay 15% of that vat to the vat man, therefore making 5%. But with this scheme I can't claim back vat on everyday purchases other than capital items over £3k I think.
Life's too short to do the calculation but I think in my case there isn't much difference in being full or flat rate.

[Jim_77]

Neil, yes you're right that's the full VAT scheme I'm talking about.  I don't think the flat rate is advantageous to anyone except HMRC tbh

Mike,

if the customer is willing to pay £1200 I can charge that and earn an extra £200

Mike that's exactly what I was driving at!  Your 1200 non-vat will put you maybe slightly more profitable than 1200 inc vat... 1000 non-vat puts someone worse off, they haven't accounted for their higher overheads having to pay VAT!

In your case Mike I'm guessing your biggest outlay is leaflets which, if I'm remembering correctly do not attract VAT?  You might have quite an out of the ordinary business model here, which indeed may be significantly better not registered for VAT as the majority of your purchasing does not include VAT, therefore not much to claim back. 

However for others, especially growing businesses who are re-investing heavily and maybe have a profit margin of 30% or even 20%, it may well be beneficial.

[Doctor Carpet (Ret'd)]

Jim, I think you are refering to the full Vat scheme with your example.
I'm on the flat rate scheme so although I charge the customer 20% I only pay 15% of that vat to the vat man, therefore making 5%. But with this scheme I can't claim back vat on everyday purchases other than capital items over £3k I think.
Life's too short to do the calculation but I think in my case there isn't much difference in being full or flat rate.

Neil
My rate is 12% but thats maybe because you and I have a slightly different mix of services we offer.

The 8% difference works in my favour at my t/o levels to reflect the fact I cannot set-off my input vat.

Perhaps the biggest advantage of the flat rate scheme is that you only pay vat from your cash-flow ie. vat only becomes liable once you have banked your takings, With the normal vat rate you have to pay the vat on debtors which can have severe repercussions if you have a large amount of debtors at the end of the quarter/slow payers.

Rog

[Shaun_Ashmore]

I think what Clive is trying to say is that its harder to sell or at least the up take is lesser with a 20% increase compared to your competitor.

Shaun

[Doctor Carpet (Ret'd)]

One way of course is to simply absorb the vat rather than charge it-but of course this'll mean a 20& decrease in your profits maximum, depending upon how many clients you make this offer to.

And on that note, for those who are above the vat threshold, which of you quote to a domestic client as £x+vat and how many quote £y (which is a price including the vat, but not specified at the quote stage)? I prefer to quote £x + vat so that if I get into a "haggle" I can offer to discount the vat part-but only for the first time I work for the client. And yes they can still pay me by cheque or on-line banking. Cash is only one option.

Rog

[Andrew Briscoe]

I am the same as Roger, i quote the amount plus vat, have found some forget when it is time to settle up, never been a problem though.

I was one of the sceptical ones when i registered, however i cant remember losing a job because of it, get your mind set right and it wont be a problem.

It was our contract cleaning division that pushed us through it, so most is commercial and they prefer to deal with vat registered companies.

Having 4 vans on the road adds up to a lot of vat, through purchasing, fuel, servicing and tyres etc, yet we still often pay out 9k in vat every quarter, not a cheque i like to write out,     on the other hand, we have between 3k-9k of vat sitting in account making a little money and helping with cashflow 

Andrew

[Craigp]

****I am the same as Roger, i quote the amount plus vat, have found some forget when it is time to settle up, never been a problem though.*****

Awww, that must cause bad feeling.

I thought the law says domestic you must give price including VAT. But on commercial you can give it excluding VAT  or have I got that wrong?

[John Kelly]

Roger, you can do cash accounting on the standard scheme as well. The VAT doesn't become payable until the invoice has been paid. Godsend for us as we used to have to pay the vat on our flood work invoices which sometimes took 12 months to be paid.

[Andrew Briscoe]

****I am the same as Roger, i quote the amount plus vat, have found some forget when it is time to settle up, never been a problem though.*****

Awww, that must cause bad feeling.

I thought the law says domestic you must give price including VAT. But on commercial you can give it excluding VAT  or have I got that wrong?

Nope, not when they get their quote out, or the copy we have 

[Kev Martin]

Stick to tiling Kev 

We don't do tiling mate

But we make money and both businesses are VAT Registered;D

Kev