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richard connett

  • Posts: 31
Commercial contracts and vat
« on: December 08, 2018, 11:32:41 am »
Hi all
Looks like I'm being forced to go flat rate vat from January. I most probably will be back with more questions but for starters
Do you tell commercial customers that they will be paying vat from now on or do you just add it?
Regarding residential I'm going to put them up a quid or few here and there and absorb a little and won't be going into details with them
I had the dreaded email from the accountant on Friday but have only just got over it!! Merry Christmas ehh
Cheers

Susan Dean (1stclean)

  • Posts: 1964
Re: Commercial contracts and vat
« Reply #1 on: December 08, 2018, 03:25:04 pm »
eight weeks work for free when you go from not being vated  at 20% think long and hard before you make that jump

richard connett

  • Posts: 31
Re: Commercial contracts and vat
« Reply #2 on: December 08, 2018, 03:59:32 pm »
Iím not able to think about it, Iíve gone over the threshold . Itís the flat rate Iím going on to start with  12 % discounted to 11% for a year. Just wondering what others out there told their commercial contracts

Martin Lane

  • Posts: 97
Re: Commercial contracts and vat
« Reply #3 on: December 08, 2018, 08:42:45 pm »
Hi been vat registered for 30 years most commercial jobs will not have any problem as they can claim it back, some only like dealing with vat registered companies, when you next invoice send out a letter telling them as from  date  all invoices will be plus  vat

Dry Clean

  • Posts: 2316
Re: Commercial contracts and vat
« Reply #4 on: December 09, 2018, 12:40:05 am »
Iím not able to think about it, Iíve gone over the threshold . Itís the flat rate Iím going on to start with  12 % discounted to 11% for a year. Just wondering what others out there told their commercial contracts

That doesn't mean you cant think about it, if your business plan isn't to go well beyond the VAT threshold then reduce your workload and stay just below it.

8 weekly

  • Posts: 2831
Re: Commercial contracts and vat
« Reply #5 on: December 09, 2018, 10:49:57 am »
Iím not able to think about it, Iíve gone over the threshold . Itís the flat rate Iím going on to start with  12 % discounted to 11% for a year. Just wondering what others out there told their commercial contracts

That doesn't mean you cant think about it, if your business plan isn't to go well beyond the VAT threshold then reduce your workload and stay just below it.
Unless youíve got loads of commercial in which case staying on 12% will be very nice.

Topclean

  • Posts: 310
Re: Commercial contracts and vat
« Reply #6 on: December 09, 2018, 10:54:08 am »
I thought flare rate has risen to 16.5%?

Topclean

  • Posts: 310
Re: Commercial contracts and vat
« Reply #7 on: December 09, 2018, 10:54:25 am »
FlatĒ

Smudger

  • Posts: 8404
Re: Commercial contracts and vat
« Reply #8 on: December 09, 2018, 10:59:19 am »
To just go over is not a good place to be - Iíd stall it for 3 to 4 months and build up more residential customers to help absorb the vat

The 11% is, thankfully a help - all commercial customers will just accept it (unless they are not vat reg) and charge them at the 20%

Residential customers we put put up around 15% - this was done in a April just u dear normal price rise - the only thing I changed was showed vat on bespoke work like gutter clearing, sfg, and pressure washing again charged at 20% to help offset the regular window work

Darran
A pessimist sees the difficulty in every opportunity; an optimist sees the opportunity in every difficulty.

www.oddbodscleaning.co.uk

richard connett

  • Posts: 31
Re: Commercial contracts and vat
« Reply #9 on: December 09, 2018, 02:33:01 pm »
Thanks for your replyís
I was under the impression that once you go over the vat threshold in any 12 rolling months itís the law to register for vat. If you make a case for an exception then you need to give reasons why you went over and better make sure that you donít go over again. I could I guess then go for the de registration threshold which is 83000 I think. Which you have to be under for three months
I canít be sure I wonít go over and I donít want to be the one to hamper the progress of my company so Iím going to let it grow naturally . Pass a good deal of the costs on( I havenít put my residential prices up for a few years! ) and not worry about thresholds
What I wanted to know was what to tell the commercial customers. So I will contact them and advise of the changes as advised on here.
Thanks for you inputs people food for thought. Itís a dilemma most of us will encounter. Worst comes to the worst sell the other van sack the employee and go out on my own. But Iím curious to how big this thing can get


hotsteam

  • Posts: 327
Re: Commercial contracts and vat
« Reply #10 on: December 09, 2018, 02:51:54 pm »
I think you will find if you go over the Vat threshold in any quarter you should be Vat registered  !

Regards Hotsteam

richard connett

  • Posts: 31
Re: Commercial contracts and vat
« Reply #11 on: December 09, 2018, 03:21:18 pm »
No itís not a quarter itís any 12 month period on a rolling basis . So atm nov17- nov18 . Then dec17-dec18 and so on

hotsteam

  • Posts: 327
Re: Commercial contracts and vat
« Reply #12 on: December 09, 2018, 03:44:14 pm »
once you go over for 12 months you will have to pay the Vat for the period if you have saved it up that's ok ?

8 weekly

  • Posts: 2831
Re: Commercial contracts and vat
« Reply #13 on: December 09, 2018, 04:31:09 pm »
You have to register if you go over in any rolling 12 month period. One tip I can give which will give you huge breathing space is to go limited if youíre not already  as your 12 months starts again. Thatís what I did.

And yes itís 16% now if you spend less than 2% of your turnover in a quarter in expenses. However vehicle, service and staff costs donít count. Has to be things like rent, resin, poles, water bills etc. Check the actual figures as they are from memory.

richard connett

  • Posts: 31
Re: Commercial contracts and vat
« Reply #14 on: December 09, 2018, 05:08:12 pm »
Already limited but thatís a good trick for some.
Iím told 12% flat rate 11% discounted for a year. 
To be honest I was a bit ped off at first but now I see it as a new start. Iíll be chasing work again from the new year and will have a some fire in the belly again!!
Looking to take the other half on soon, driving sales and hopefully getting making me more organised !! What can go wrong !! 

Perfect Windows

  • Posts: 3260
Re: Commercial contracts and vat
« Reply #15 on: December 09, 2018, 06:29:11 pm »
If you're close to the limit, consider leaving it until after Christmas if you can - you'll be missing a few days so if it means missing one or two more days to stay under it might make sense so you're working full months once you're registered.

The only way to deal with it is to grow quickly so you can power through it as fast as you can. Over the past year, pretty much every single penny we've grown has disappeared in VAT. However, once you're through, you're through and you don't really need to be concerned with it any more. You just have an extra, constant cost on your business. Such is life.

Good luck!

Vin


8 weekly

  • Posts: 2831
Re: Commercial contracts and vat
« Reply #16 on: December 09, 2018, 07:30:30 pm »
If you're close to the limit, consider leaving it until after Christmas if you can - you'll be missing a few days so if it means missing one or two more days to stay under it might make sense so you're working full months once you're registered.

The only way to deal with it is to grow quickly so you can power through it as fast as you can. Over the past year, pretty much every single penny we've grown has disappeared in VAT. However, once you're through, you're through and you don't really need to be concerned with it any more. You just have an extra, constant cost on your business. Such is life.

Good luck!

Vin
Until you get to £230k.

richard connett

  • Posts: 31
Re: Commercial contracts and vat
« Reply #17 on: December 10, 2018, 03:35:27 pm »
One other thing.... some have said charge the commercials 20% even though the rate is 12%
Is this right?

8 weekly

  • Posts: 2831
Re: Commercial contracts and vat
« Reply #18 on: December 10, 2018, 05:24:11 pm »
One other thing.... some have said charge the commercials 20% even though the rate is 12%
Is this right?
Yes, youíre supposed to charge 20% VAT by law. Itís only 12% as you canít get back what you spend

Crystal-clear

  • Posts: 2555
Re: Commercial contracts and vat
« Reply #19 on: December 10, 2018, 10:37:45 pm »
eight weeks work for free when you go from not being vated  at 20% think long and hard before you make that jump
take it you prefer to stay under the VAT threshold or keep the business at a particular level?

I understand that VAT is an issue but I think it's quite easily tackled. Basically a £10 job has to go up to £12 if you still want to make £10 before profit.

Literally this is what I would do when the time comes personally I would not just say I'm uping prices I would say thanks to your fantastic custom we are now VAT registered and I would literally just up the prices straight away from next clean
I would only do this on the houses which are Borderline priced any houses which were priced better I would just absorb the hit because the profit may already be reasonable if you get cancellations due to the price going up this may just keep you under the VAT threshold and then as new work comes in you make sure you price it appropriately so technically you're not losing a week's work whatsoever you're just charging more
One other thing if you're hitting those figures you are certainly employing which means you are no longer doing a lot of the work it's a bit different in other words you can still technically charged the same price your charging and make profit from an employee rather than doing it yourself which would be a bit of a Stinger because you were used to more money. That's the best way to think of it if you ask me

any new work we'll be priced plus VAT if I am to lose work because I'm charging that little bit more that's all part and parcel of being a bigger business.
I think it's silly to stay small grab the bull by the horns I hope most of you agree and make sense out of this