VAT Flat rate scheme

[Andy Collins]

My (limited) understanding of this matter is that Forestry is linked in with the Agriculture sector, in order to grow a crop, maintain and harvest it. Arb sector is providing a service, we do not grow a crop that is to be harvested. Of course, this is only my interpretation, I have no real knowledge of the matter.

[nailer]

This is how HMRC probably see it: Arb, trees. Forestry, trees. Forestry it is.

 

And it`s 1% lower than `Other`.

[skyhuck]

The main thing is to do with expenditure, we spend in a very similar way, whether we are doing arb or forestry.

 

Most of our outlay is on labour and equipment, not stock, we retail very little.

 

If you are a landscaper you are buying in lots of materials etc, we are not.

[Quickthorn]

Just bumping this up.

 

Has anyone noticed the new flat rates from 1st January 2010? They're here at HMRC website.

 

I put myself in the forestry sector, and before 1 December 2008, I was paying 9% on VAT inclusive turnover. It went down to 8% after 1/12/08, and from 1/1/2010 it went back up..but not to 9%..they now want 9.5%, it seems.

 

Am I wrong, or have they snuck in a crafty little tax hike?

[Kev Stephenson]

your charging more so paying more. Simple maths????

[skyhuck]

your charging more so paying more. Simple maths????

 

:confused1:We were charging 17.5% before and paying 9%, we are now charging 17.5% and paying 9.5%.

 

According to my simple maths thats a TAX increase of 0.5%.

[Kev Stephenson]

I was basing it on the last 15 months with vat at 15%

[Quickthorn]

According to my simple maths thats a TAX increase of 0.5%.

 

And it's off your turnover as well, not profits.

[Highland Forestry]

There's something I am not getting here...

 

With the VAT flat rate scheme, I thought you pay a percentage of your TURNOVER, 9% roughly for forestry.

 

If you are charging 17.5% ontop of your prices for VAT, there is a big defficite.

 

For example, if you put a bill out for 100k then when you add your VAT ontop it will be £117,500.00 inclusive.

 

So 9% of this would be £10575 which means you would make a profit of £6925 on the VAT alone for every 100k you invoice out.

 

Is this right or am I missing something?? Dosent seem logical that the government would let this happen as for every 100k you invoice out they would be loosing nearly 7k ??

Or am I being too cynical??

[skyhuck]

There's something I am not getting here...

 

With the VAT flat rate scheme, I thought you pay a percentage of your TURNOVER, 9% roughly for forestry.

 

If you are charging 17.5% ontop of your prices for VAT, there is a big defficite.

 

For example, if you put a bill out for 100k then when you add your VAT ontop it will be £117,500.00 inclusive.

 

So 9% of this would be £10575 which means you would make a profit of £6925 on the VAT alone for every 100k you invoice out.

 

Is this right or am I missing something?? Dosent seem logical that the government would let this happen as for every 100k you invoice out they would be loosing nearly 7k ??

Or am I being too cynical??

 

BUT you get NO VAT back on ANY of your running costs, such as fuel or subcontractors and only get VAT back on capital purchases over £2K.

 

I turnover a little over £100K and save about £800 by being on the scheme and my admin is easier.

Edited January 8, 2010 by skyhuck