[Dean Taberner]

Why not just go for flat rate VAT?

It's simpler. I think it's 12%.

Yes that's correct, its 11% for the 1st year, you raise the invoice at 20% vat but pay the VAT man 11%. You cannot claim any VAT back though on purchases under 2k though.

That alone can also be very distressing.

Dean.

[Rogue Trader]

though not as ditressing as payin the VAT man 20% and having to do a proper longwinded PITA VAT return every quarter!

[George P]

though not as ditressing as payin the VAT man 20% and having to do a proper longwinded PITA VAT return every quarter!

providing youve not spent the money its not too difficult, i can do our vat return in a morning, nice to be working in office, cuppa whenever i want, nice and warm, just need to check agian if ive spent there money or not

[P @ F]

Rogue Trader , are you Dave Morris ?

[www.com]

what rubbish.

your accountant needs the sack mate. how can a job be a "sale" untill any money changes hands. rubbish.

Vin is right. you cannot set up other accounts to get around vat.

However there are 2 ways you can

1. if you set up other companies they cannot have ANY and I stress ANY shared resources. for example if you had 2 window cleaning business and there were totaly separate but only shared so much as a printer in your office that would not be alowed. so you would have to have double of everything.

2 you can be a sole trader and "incorperate" a Ltd company. for example I am a sole trader. I am Lee Pryor trading as Pryors window cleaning. I am franchising my business at the moment and am setting up Pryors window cleaning Ltd to be just for the franchising.

I am vat registered but my incorperated Ltd company wont need to be untill it hits the threshold

It's not rubbish at all. There are two forms of Vat accounting, cash and accural. Accural s compulsory at around 1.6m turnover but a choice before then.
Cash = you pay on what your paid,
Accural = you pay on what you invoice. Meaning, you'll pay vat on money you haven't recieved.

[Dean Taberner]

Mr Industry,

Are you the VAT man?   

Only joking ofcourse. 

[keyser soze]

 question ?if you have 5 vans grossing over 200k you need to be vat registered . and there is no legal way to avoid going vat registered .the reason i ask is i know someone who is doing that

[William McCafferty]

as far as the taxman is concerned, what they want you to record is work done and invoiced, it doesn't matter if you have been paid there and then.

At the end of the tax year you can claw back the ones who haven't paid you and you only pay tax on what money you have recieved minus your expenses.

The vat man and vat is a different creature, in the old days you could register for vat if you thought you would hit the vat threshold in the coming year.

This was stopped a few years ago, because of a loophole that many businesses where exploiting, me included

Now you only have to register when you reach the vat threshold, but this threshold is set on work done not paid.

If you look at it this way, if you do work you expect to get paid, the vat man has the same opinion.

Yes you can run to businesses at the same time and not register for vat, but you have to prove to the vat man that they are not connected in any way.

If both are window cleaning rounds then you will have a major problem, because the vat man will not believe you, and as far as they are concerned you are guilty.

You will spend a fortune trying to convince them otherwise.

[Andrew Willis]

as far as the taxman is concerned, what they want you to record is work done and invoiced, it doesn't matter if you have been paid there and then.

At the end of the tax year you can claw back the ones who haven't paid you and you only pay tax on what money you have recieved minus your expenses.

The vat man and vat is a different creature, in the old days you could register for vat if you thought you would hit the vat threshold in the coming year.

This was stopped a few years ago, because of a loophole that many businesses where exploiting, me included

Now you only have to register when you reach the vat threshold, but this threshold is set on work done not paid.

If you look at it this way, if you do work you expect to get paid, the vat man has the same opinion.

Yes you can run to businesses at the same time and not register for vat, but you have to prove to the vat man that they are not connected in any way.

If both are window cleaning rounds then you will have a major problem, because the vat man will not believe you, and as far as they are concerned you are guilty.

You will spend a fortune trying to convince them otherwise.

Nice post

Richie

http://www.hmrc.gov.uk/vat/start/register/when-to-register.htm#7

Visit the HMRC site loads of info on their site

Main point

Do not avoid registering for VAT by artificially separating business activities
If you run more than one business the sales in all those businesses must normally be added together to determine whether or not you must register for VAT.

However, if you are involved in the running of several separate legal entities, you may not need to combine the sales of those businesses to find whether you need to be VAT-registered.

If HMRC decides that you have artificially separated one business into smaller parts to avoid registering for VAT, it can decide that the entire business is a single taxable person and therefore must be registered for VAT. See the description of 'taxable person' in the section in this guide on who can and can't register for VAT

Situations that HMRC may consider a single taxable person for VAT purposes include:

Separate entities selling to registered and unregistered customers.
The VAT-registered entity sells only to VAT-registered customers, and the entity not registered for VAT sells to customers who are not registered for VAT.

The same equipment or premises being used by different entities on a regular basis. The premises and/or equipment are owned by one of the parties, who charges rent to the others. This situation may occur in businesses such as launderettes and takeaway food operations.

Splitting up what is usually a single sale.
This is common in industries such as the bed and breakfast trade, where one business supplies the bed and another the breakfast.
If you deliberately avoid registering for VAT, you may be liable to a penalty. For serious offences, the matter will be investigated and you may be prosecuted.

Andy

[Helen]

i may be stupid and some are prob gona laugh but i honestly didnt know that every invoice or job you do is classed as a sale been in with the new accountant all day at my unit he said every job you do is classed as a sale so maybe this is where my opinions have been differing with others i honestly thought that level of vat was taken from what you actually take after each job is cleaned and paid for not for every job that is cleaned oh well you learn something everyday, finance side of things have never been my strong point of all the bookeepers etc i have used some accountancy firms have never got this message across, or the business coach i have used im completely taken a back by it, i know you can use bad debtors against this figure

Rich get a grip
 Example you do £100 worth of work and you are vat registered on flat rate, cash accounting, not full rate.
 £100.00 nett
 £20.00 vat
£120.00 Gross
 A)You get paid £120.00
The £100 nett figure is your nett turnover.
The £120.00 gross figure is what you pay vat against (flat rate is a %)
 B) You get paid £80.00 of the £120.00
The £100 nett figure is still your nett turnover etc etc
You pay personal tax and vat against the £80.00 on cash accounting.
 Not nagging, but you have to get your head round these things, you can't just leave it to someone else, even an accountant. Speak to this accountant and ask him about flat rate vat ;

[William McCafferty]

richy

the taxman has free courses you can go on, even if you have other people who deal with your business, you still need to know some basics.

[Lee Pryor]

Hello Lee ,

Good luck with the franchising! It can be a rocky road though , you should speak to Matt at Matt's mowing , im sure you have seen his vans , he is a home sevices company in our area and he has done a lot in the franchising field and would be an excellent resource for you.

Hi matt

Rogue trader?? lol yes I know of him. wasnt he involved with nice n strippy? wasnt that his business?

[steve rix]

ask about setting a second company up( its legal) to keep your level below the vat threshhold sounds as if theres twice as much work but its only splitting what you have. its worth it to save vat surcharge you have to charge to custys and making yourself too expensive. a 12 job will become 14.40 and so on, vat  for us guys is not an attractive option .

Be VERY VERY careful. Absolutly NOT legal

[S.A.J]

My account advised me to split my company up into SAJ Commercial & SAJ Domestic,

I decided not to as 1 I did not think it was legally right and 2 the ball ache to do it

2 names 2 vans 2 sets of accounts 2 computers 2 bank accounts, one company cant use the other company's equipment unless it is invoice for if i did work for the other company then i will have to bill them for the job + labour

and soooo on

to much hassle for whats its worth so we ended up going fully VAT reg and has probably been the best decision I have ever made, for some reason commercial clients take you more seriously 

As for domestic we just hide the vat in the cost but we dont think oh a £10 has got to be £12!!! we just clean like normal and at the end of the day minus the vat out of the days turnover!!

That's my way of doing things some might agree some might not 

Stuart

[Helen]

Stuart, I really don' think some people appreciate the amount of work that can be involved when splitting business, let alone the risk of HMRC catching up with them.
As for accountants advising to do this, I guess it all depends on what sort of accountant you have...... as you said 2 lots of accounts, 2 businesses etc etc . Accountant gets 2 lots of fees for dealing with 2 businesses

We went vat registered on flat rate and as you say it's been really helpful when gaining commercial. With higher end domestic we find that they like the fact we are vat registered. it gives them extra peace of mind in a strange sort of way.

The vat issue was discussed this year with our accountant and HMRC are now looking into making the "person" (which can be human, partnership of 2 or more people, the company) vatable.
We hope not as our 2 businesses are totally different, and one is not vat registered, but I wouldn't bet against it happening though

[Roy Cauldery]

My account advised me to split my company up into SAJ Commercial & SAJ Domestic,

I decided not to as 1 I did not think it was legally right and 2 the ball ache to do it

2 names 2 vans 2 sets of accounts 2 computers 2 bank accounts, one company cant use the other company's equipment unless it is invoice for if i did work for the other company then i will have to bill them for the job + labour

and soooo on

to much hassle for whats its worth so we ended up going fully VAT reg and has probably been the best decision I have ever made, for some reason commercial clients take you more seriously 

As for domestic we just hide the vat in the cost but we dont think oh a £10 has got to be £12!!! we just clean like normal and at the end of the day minus the vat out of the days turnover!!

That's my way of doing things some might agree some might not 

Stuart

At last- the voice of reason!!

[Rogue Trader]

Lee ,

That is right , that is the fella , nice bloke actually and always willing to impart his wisdom, you should give him a call as he will be happy to talk to you im sure.

[richywilts]

sod splitting my business into two running this one has been hard enough!!!!!

[Helen]

sod splitting my business into two running this one has been hard enough!!!!!

Good decision,make sure you stick with it

[richywilts]

looks like im downsizing to just me helen the usual good worker who hits big amounts doesnt seem to like working in the cold become so unreliable since coming bk after xmas so im working on refining the rounds right down and maybe hoping this contract comes off