[maxcarpets]

I try not to make a big thing of it, small print " All prices are subject to 17.5% V.A.T". I saw a window cleaning Co that did the opposite and had " YOU CAN TRUST US WE ARE A BONAFIDE VAT REGISTERED COMPANY!"

Cheers!

Justin

[mark shannon]

Carpet Guy how come you have not had to register?

[Ian Rochester]

The only way I think you can be vat exempt is by splitting you business into so many smaller companies that they are all under the threshold.

[maxcarpets]

Is that legal?

[Doctor Carpet (Ret'd)]

If you split a business to try and keep under the threshold then if you are investigated then The Revenue will presume this was tax evasion (as opposed to tax avoidance, which is legal) and the onus is on you to prove otherwise.

Ian, I am with you on your replies.

Of those who are VAT registered, how many have gone for the flat rate level of VAT? My VAT liability under the scheme is only 11.00%

If you don't know what I'm talking about then let me know and I'll give a fuller response.

[maxcarpets]

Fire away, Doctor carpet.

[Joe H]

I dont think there is anything wrong having a business in your name and one in the wifes name.
Too much paperwork for me in the VAT scheme of things.

[Ken Wainwright]

Back in the 80's early 90's when I was an employer, I had to be V.A.T. registered. I was so worried that it would have an adverse effect on my residential work. It made no difference at all. Joe and Josephine Public just accepted it. I always quoted £xxx plus V.A.T. Back in those days, it was a legal requirement to show V.A.T.  as a seperate item on all invoices over £50, so I didn't want to mess around with two different systems.

As for administering the V.A.T. system, it was a piece of cake. So easy to do. As long as you are disciplined and don't spend the tax you've collected, you can use the extra cashflow to either minimise your overdraught charges or to gain interest in a savings account. Overall, I reckon it took about 10 minutes extra a week in paperwork and perhaps an hour or so at the end of every quarter.

Organising your business under different names to evade V.A.T. is, as Doctor Carpet points out, illegal. Or it certainly was back in the 80's.  Penalties can be severe.

If you de-register from the system, remember that as you are unable to reclaim the tax paid, your costs will increase, so your charges will need to go up to compensate.

Safe and happy cleaning
Ken

[Doctor Carpet (Ret'd)]

OK

Flat rate VAT scheme is open to any business with t/o less than £150k. Paperwork is minimal. Your VAT liability is 11.00% (10.00% for your first year only. Different industries have different rates but always with the 1% discount for the first 12 months) of your gross t/o.

 You cannot claim back your input VAT (except for large capital expenditure). Payable at the end of each quarter you pay the 11% of what you have paid into your account NOT what you have invoiced for but not been paid for yet. (this means your cash low isn't knackered.)

For any other VAT registered businesses that you clean for you invoice for whatever you agree, add VAT at 17.5%. Here's the good bit, having charged 17.5% you then only pay over to HMRC the 11.00% as mentioned above. Non VAT registered businesses/private customers you simply charge them as before. You may or may not add on 11% or 17.5% depending upon your pricing structure/ competitiveness (or add on indeed any othe figure) and again simply pay what's due on what you have banked at the end of the quarter.

Of course 11% works out at a slightly higher rate than it sounds becasue you are charged on gross t/o not net of VAT t/o.

The scheme is specifically geared to people like us where most of the t/o is value added because of labour and not selling "widgets".

In summary the paperwork is simple and it's cash-flow positive.

Hope that helps, let me know if you want further explanation.

[mark_roberts]

Im on the flat rate and as the doctor says its a piece of cake.  If you where doing only commerical and charging VAT you could even be making more money from the difference.  It suits our business as expences are much lower as a % of turnover with labour being the main element.

Yes it may seem daunting charging residential more or doing a little more paperwork but if your anyway half 'successful' in this game you'll reach the threshold quickly.  The services of a good accountant which you should have anyway, will help you with the paperwork etc.

Purchases over £2000 ie. machine, van etc you can claim the VAT back so makes these purchases less 'taxing'.

Mark

[Neil Williams]

I dont think there is anything wrong having a business in your name and one in the wifes name.

Oh yes there is if they are similar busesses, run from the same address. We did that for a while. The window cleaning side was in my wifes name and the carpet cleaning in mine. Both were under the VaT threshold on their own BUT our accountant warned us what the inspectors would do if we had an inspection. They would in effect take the 2 names as one and back track back to where Vat wouldn't apply then give us the bill for unpaid Vat.
So we created one business PDQ.
I think we made about £600 last year on the difference between charging the customer 17.5% and paying the Vat man at 11%. Not a bad deal really for a bit of paperwork and being disciplined enough to put the money back.

[Joe H]

Interesting Neil.
It was my accountant (an ex tax man) who suggested split the business (general cleaning) which was initially joint names into one joint names and one my name.
So we did split the business on a geographic basis.
During the period we had that in operation we had a visit from the In Rev for a complete check and everything OK.
That would be about 13 years ago.

[Neil Williams]

I am very happy to say, in our £300k turnover business, we are VAT exempt, but are a limited company, which I would NOT recommend, shortly reverting to non-limited

please can you explain why you are vat exempt?

[carpet guy]

Sorry for the delay, but I've been doing boring work on the computer all day.

Didn't mean to mislead you, but there are a few businesses which are exempt from VAT and our MAIN business, is one of these !

What Joe says is correct, as long as the businesses are clearly TWO SEPARATE entities, run by different peope.

[Shaun_Ashmore]

A diverse way is to do what a friend does although not in our trade.

He set up a company and he was a director which is an employee of the company which was vat registered then he set himself as a sole trade under his own name not vat registered, domestic jobs go to him and commercial go to the company although i don't know how they share equipment perhaps only he knows

Shaun

[carpet guy]

That's very similar to my wifes husband, if you know what I mean

[Joe H]

domestic jobs go to him and commercial go to the company although i don't know how they share equipment perhaps only he knows
Shaun

Perhaps for the paperwork one business rented the equipment to the other.
As long as the charges were kept reasonable that would probably be ok.

[COLIN BRIGHT]

i went VAT reg in march last year when i got my truckmount
i thought it would have a big affect on bookings but domestically i find people never ask and commercally most can claim it back anyway
i find that the commerciall market take me more seriously since going VAT
and if you want to grow your business, then theres no way round it
like someone said earlier, the more VAT you pay, it follows the more you are earning
or am i wrong?

[maxcarpets]

That was how I see it, surley if you use NOT VAT TO PAY on a leaflet you really mean, I'M NOT VERY BUSY!

[COLIN BRIGHT]

i find people want a quality job done, price normally is not an issue, if it is then you don't want them as clients anyhow