We've had a busy few months recently plenty of new customers retained at the verge on VAT which I'm assuming you are as well
So I shall give you my terminology on vat.
The way I see it in simple terms is this. If most of your client base cannot claim the VAT back i.e. domestic etc It basically becomes harder and you can't get around it.
two options
1) up your prices to acomodate the hit.
2) do not up your prices and pay duty on turnover
the above option 1 is probably the route to go. If you're priced reasonably and you haven't incrased your prices for a while you could probably get away with it with probably only a handful of cancellations. But would you be pricing yourself out the market just a little bit?
Which leads to option 2
Where do you wish to take the business? Because if you intend to grow further you need to be competitive. If you're doing the majority of the work yourself with some occasional help and hitting the VAT threshold I would say option one is for you. You will charge a bit more and you will do the majority of the work yourself your customers know you're the business owner will definitely always go the extra mile in communication and in every aspect, but it's different if you're employing
Essentially you need to look at it purely as financial
Turnover goal even if it's the same as you're doing but paying the vat from employees Manpower.
Option 2 your chasing profit and will suit if you are mass marketing in any way. You're looking to keep your employees busy and make a profit excluding VAT and excluding daily salary and running costs of the vehicle.
So I think breaking the threshold and not upping your prices is essential that you have a very good small team around you first. You wouldn't up your prices to keep them busy to keep them producing a stable profit. Or You would up your prices but you may not have a stable profit as previously
Basically you compete by keeping your prices competitive while still being able to make a profit.
If look at it this way you're turning over 84999. Everything's happy you're paying expenses and you walking away with a lovely profit.
You go over by 1 pound and now £17,000 duty is due which leaves you with 68000 before your expenses! You'll have a little bit back on VAT but ultimately this is horrible and it's definitely a challenge to get around.
Imo is your van(s) able to hit a competitive day rate relative to most? If the answer is yes decide how big you want to be and then that should reflect on which option you take. You take the hit and grow fast keeping as much Manpower around you as possible or you up your prices and grow slowly
Or you could do a mixture of both up some of the really low prices if you have them. Take a hit on the rest to keep your work stable.
I kind of put the pieces together from a lovely chap who works in Sussex and doesn't currently frequent the forum wonder who that could be!
Anyhow I think you should closely monitor your turnover every week every month. And prepare diligently I'm ready for the challenge I hope you are as well. ( think I'll go on holiday first though lol because I probably never get one again chasing that 20%)