[Crystal-clear]

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?

[britishwill]

I am interested to hear what will be said on this one!

[rah]

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.

[chanster00]

any one thats vat registered is a pleb 

[dannymack]

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.

[Crystal-clear]

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 !

[Neil Gornall]

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.

[dannymack]

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

[deeege]

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! 

[dannymack]

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 😀

[Crystal-clear]

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;)?

[CleanClear]

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.

[Crystal-clear]

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.

[dannymack]

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

[Dominic Carnell]

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.

[Crystal-clear]

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

[8weekly]

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.

[Crystal-clear]

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;?

[dannymack]

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.

[AJ]

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.