Vat registered companies.... how do you stay competitive

[swinny]

Just looking to find info on how vat registered companies get on in the domestic sector of work when pricing against non vat registered companies?

 

Especially when cash flow is critical for wages for employees. You need to win as much work as possible but your now 20% dearer.

 

Considering all jobs have a ceiling price....

 

non vat registered man prices 480.00 and vat reg man prices 400.00 plus vat. Sounds more like non vat registered man is on a better deal to me. 

 

Unless your continually buying things and considering fuel reciepts with vat at 10-15.00 a time then surely your always paying out a good proportion of the vat you have to charge? And cash flow is less as the vat isnt yours its the vat mans! Non vat reg man has 480.00 to play with and vat reg man has 400.00.

 

do vat registered companies still do the smaller little hedge jobs and smaller trees etc? Or has business out grown these due to bigger overheads and inc vat puts you out of being competitive?

 

hope not too intrusive of a question!

Edited August 21, 2018 by swinny

[Steve Bullman]

Its simple, you charge the same as others and accept you're always going to be 20% more expensive.  Dropping your prices by 20% is futile.  You just have to work more on your marketing and way with customers

[gdh]

You'll end up charging a bit more but it should be from a lower base rate as claiming back vat on pickups, chippers, saws, chains fuel etc will soon add up.

[Conor Wright]

I registered for vat early on.. its a double edged sword.. have to be a little more expensive (23% over here) but it reassures customers you're not a fly by night operator, however I do find myself absorbing at least some of it in many quotes as most of my work is domestic so it can be hard to be competitive.. then again those wanting the cheapest possible job are not always the customers (or jobs) you want!

Bought much of my machinery from europe so no vat charged on import and vat back on fuel, chains, repairs, ppe etc.. even the dogfood! (but just for the gsd, the beagle is not classed as a guard dog so not a business expense, sadly!)

[Inoff the Red]

Brace yourself chaps, this could be an academic argument. The VAT threshold is likely to be reduced to levels more in line with other mainline EU countries e.g. Germany €17,500; France - (Services) €33,200; Belgium €25,000; Austria €30,000.

 

There is pressure within the EU to equalise the vat thresholds so that no one has a competitive advantage. (and the deal that Theresa May is proposing is likely to lock us into accepting whatever the EU decides on this matter). Given that the EU derives a large chunk of its budget from VAT collected in EU countries you begin to understand why the EU commissioners are so keen to reduce the thresholds for registration. The more sales that are subject to vat, the more cash goes into their coffers.

[swinny]

6 hours ago, Inoff the Red said:

Brace yourself chaps, this could be an academic argument. The VAT threshold is likely to be reduced to levels more in line with other mainline EU countries e.g. Germany €17,500; France - (Services) €33,200; Belgium €25,000; Austria €30,000.

 

There is pressure within the EU to equalise the vat thresholds so that no one has a competitive advantage. (and the deal that Theresa May is proposing is likely to lock us into accepting whatever the EU decides on this matter). Given that the EU derives a large chunk of its budget from VAT collected in EU countries you begin to understand why the EU commissioners are so keen to reduce the thresholds for registration. The more sales that are subject to vat, the more cash goes into their coffers.

They looked to reduce it to 47k i think it was in last budget but it was thrown out

[swinny]

8 hours ago, gdh said:

You'll end up charging a bit more but it should be from a lower base rate as claiming back vat on pickups, chippers, saws, chains fuel etc will soon add up.

Thing is though that vat on yard fuel and other normal bits and pieces pcm add up to not much at all to offset the vat.

 

granted you can claim back vat on capital assets up to 4 years so for example 10k etc but you cant use that to offset and lower your base rate. 

 

Costs are costs. Claiming the vat back on purchases 4yrs is only a bonus.

 

flat rate doesnt seem appealing either

[treevolution]

The flat rate is not worth doing anymore since the rate moved from 10.5% to 16.5% of your turnover.

 

It would be good if the VAT threshold was reduced so that everyone was in the same boat.

 

Being a tax collector for the government does lose me a lot of domestic work to firms that have just started up or stay under the threshold.

[Eddie Eco]

My company is VAT registered and 80% of our work is domestic, never really had a problem apart from the odd one or two situations when quoting against others who aren't. Most of the time our competitors are also registered, so not an issue. To be honest I'm surprised more firms aren't - registration has only ever been a good thing for us - everything the firm needs is suddenly 20% cheaper! The only genuine issue we have is cashflow, chasing unpaid invoices when you're return is due!

[swinny]

1 minute ago, Eddie Eco said:

My company is VAT registered and 80% of our work is domestic, never really had a problem apart from the odd one or two situations when quoting against others who aren't. Most of the time our competitors are also registered, so not an issue. To be honest I'm surprised more firms aren't - registration has only ever been a good thing for us - everything the firm needs is suddenly 20% cheaper! The only genuine issue we have is cashflow, chasing unpaid invoices when you're return is due!

 Cheers for that Eddie that would be my main concern cash flow