[Pj]

Hi
Not trying to go off topic, But.

I know (think) there is a limit at which you HAVE TO be VAT registered.

But is there any advantage if you earn a fairly good amount & and spend a good amount, in opting to register, then claim all that VAT we pay out?

I may have it completely wrong & the idea may be way off base but does anyone know enough to put me right?

Thanks
Martin

The law states that if you expect to turn over 64K or more p.a. then you must register for VAT.
All that means is that you must show a charge of 17.5% VAT on all your invoices and show on your accounts records.
The up side is that you can reclaim VAT on all your purchases.
If you are turning over 64K then VAT isn't your big concern, it's more about what to spend your profit on!

You may register for VAT even if you don't hit 64K, in fact any turnover can register for VAT, the only advantage is if your purchasing costs are very high then you can claim back the VAT you paid out.
For windowcleaners that would be a waste of time, none of us spend enough on purchases to justifybeing VAT registered.........UNLESS you are expecting to turn over 64K and above...

 .....which by now Dave @ St loadsamoney Ives must be close!

I was registered for VAT once for 4 years, I had to be, and we had a VAT inspector come in and go through my books.  They can do that at a moments notice.  She spent 3 days going through them and commended us for our accuracy!
But that was a few years ago..

[DASERVICES]

Or a better idea, split your company in two. One side owned by you the other owned by your wife. That's what a lot of people do when they get to that point.

[Davew]

I'm nowhere near VAT level.  I can't see it happening while I'm a sole trader either.  £64k is a lot of windows for one guy to clean in a year.  On my own I doubt I would be physically able to manage it.  If I employed someone then I'm sure it would eventually achievable.

Oh come on shiner your obviously not trying there are people on here earning over a hundred grand a year working three days a week............................ honest. :

[Village Gleam]

Artificial seperation is illegal, they have ways that they define it.

Eg, if husband and wife are running the same business from the same premises operating in the same kind of field then that is probably one business.

If this does not apply, (or something like)it's okay.

[Pj]

Artificial seperation is illegal, they have ways that they define it.

Eg, if husband and wife are running the same business from the same premises operating in the same kind of field then that is probably one business.

If this does not apply, (or something like)it's okay.

Yep, another topic really, but it's all about control.  And the tax dept, should they decide to investigate, will define that for you

[Spursboy1972]

If I hit my targets that I have set for myself then I will have to consider becoming VAT registered in the next 12 months. I am hoping to be faced with the problem of how to introduce VAT to my domestic customers.

I know of other ways around it which I may explore nearer the time.

[Paul Coleman]

I'm nowhere near VAT level.  I can't see it happening while I'm a sole trader either.  £64k is a lot of windows for one guy to clean in a year.  On my own I doubt I would be physically able to manage it.  If I employed someone then I'm sure it would eventually achievable.

Oh come on shiner your obviously not trying there are people on here earning over a hundred grand a year working three days a week............................ honest. :

Oh alright then.  Maybe £63,999   

[Davew]

Well don't work so many days then, just work one day a week and that should get you below the vat threshold.

[Moderator David@stives]

well so far 1 in 5 say they are registered out of them that replyed.

Reading other posts this figure does suprise me, i thought it would of been much lower.

[trevor perry]

i thought it would be much higher when you read posts of people doing £300 or £400 a day either some are telling porkies or they only work two days a week , i am vat registered and earn nothing like these amounts .

[Majestic]

12 have voted yes but not many have said who they are, they must be shy

[ronnie paton]

off that cheeky fellow ...the taxman

[Alistair@AWC]

Dave Morris,

I keep meaning to make an appointment with my accountant to discuss VAT registration with him!

But you seem to have a fair bit of knowledge on the subject so if you dont mind I'll pick your brains

I've heard about a flat rate scheme where VAT is set at about 10% - do you or anybody else have any info on this

Regards

Al

[Village Gleam]

I was flat rate.(different biz)
You get one percent discount for the first year.
ten percent of total turnover.
You can't claim back- apart i think like a major purchase such as a van.
You have to be accepted- you can pay quarterly online- it's very simple you don't need an accountant.
More details on tax website.

[Moderator David@stives]

The flat rate scheme is designed to help small businesses by letting you calculate your VAT payment as a flat rate percentage of your turnover. The percentages are decided according to the trade sector your business is in. Under the scheme you will not be able to reclaim any of the VAT you pay, as this is taken into consideration as part of the percentage calculation.

The main benefit of this scheme is that it reduces the time you spend accounting for VAT because you don’t have to record the VAT charged on each individual purchase and sale.

Businesses in their first year of VAT registration can also benefit from a 1 per cent reduction in the flat rate. To calculate this, take off 1 per cent from the flat rate for your sector. For example, if your business belongs to a sector which has a flat rate of 10 per cent, you should apply a flat rate of 9 per cent in your first year.

Who can use the scheme?
You can apply to use this scheme if:

your annual turnover (excluding VAT) will be £150,000 or less
your annual total turnover (including VAT) will be £187,500 or less.
For the second test above, ‘total turnover’ is the value (including VAT) of all your business supplies, including any exempt and non-business income. Non-business income is only included for deciding whether you can join the scheme. It will not be used to work out how much VAT you need to pay once using the scheme.

[Ian Rochester]

11%, 10% in first year, you can only claim back VAT on capital purchases over £2000.

If your overheads are quite low, or your main expenditure is on wages which is not vatable then this is the way to go.

However once you reach the upper limit £185,000 then you have to revert to standard VAT scheme.

[*Chris Browne]

The flat rate scheme also cuts down on paperwork and time, i can definitely recommend it


Chris

[Alistair@AWC]

Chris,

Have you found that overall you saved money on this, taking into account you cant claim any VAT back on purchases.

Also, if think I was told on here but I cant remember who said but - if you register under 'cleaning services' the flat rate is 11%

but if you register as a window cleaner it doesnt fall into a category so comes under 'others' which is 10%

AL

[Village Gleam]

From my limited understanding it is simple to administer and gives you peace of mind that you are legal. Those are the benefits.

There is a calculater on the tax website where you can check which scheme would be better for you. I' m pretty sure thought the answer will be flat rate.

Other things to consider. T/O 60K pay nowt. T/O 70K pay 7k. If was making the decision there must be a point where you are better off.

One other thing to remember. the amount that you pay comes off T/O for tax purposes. This is a concession apparently. So for the sake of argument that 7k quoted above would have had personal tax payable on it anyway - so you are not 7k worse off, you are 7k minus your the appropriate rate that you would have paid tax on it as an income surplus.

Sorry if I have confused things this is just my personal view. Take expert advice or look on the website.

[Alistair@AWC]

VG

Thanks for that, I see what your saying about 'just under vs just over' but im hoping to keep growing so I think I'll just bite the bullet and get it over with!

Cheers Mate

AL