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

[Gray git]

....and then the vat review will be followed by an income tax investigation.
HMRC have an interesting method of dealing with such matters. Given grounds to suspect non disclosure of income, they raise a huge assessment for unpaid tax. The tax evader then has to pay or prove the amount is excessive.
It only takes a bitter divorce, dumped girlfriend or dis-satisfied customer to blow the whistle to HMRC.  
 

You've been on here since 2013 and not sussed marks sense of humour yet have you....[emoji6]

[Stephen Blair]

I got a VAT review when I first registered in 2002 I think it was a Si was claiming about £8k back on assets, a nice lady turned up, looked through all my receipts and found a further £1100 I hadn’t noticed, no drama job done.

[Jonny69]

On 21/08/2018 at 22:20, swinny said:

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!

The short answer to the thread title is, you don't. 

 

I really wouldn't worry about it. Anyone employing more than one person, working full time and not hitting the VAT threshold is either hiding income, crap at their job or earning no money. If you do a bit of fencing as well it looks even more suspect with the cost of materials so high. 

 

You can still do all jobs. I did a tiny  £100+VAT stump grinding job last week at a small private house. So it makes no difference. 

 

If you quote for decent work against decent companies then everyone should be VAT registered anyway (that's gonna cause some offence!).

 

Regarding cash flow. It's sometimes nice to do the return, wait till the 10th of the following month when the VAT comes out the bank. Then get some unpaid invoices paid at the end of that month where you get to keep all the VAT, it feels like winning the lottery.  

[Radda]

2 hours ago, Jonny69 said:

The short answer to the thread title is, you don't. 

 

I really wouldn't worry about it. Anyone employing more than one person, working full time and not hitting the VAT threshold is either hiding income, crap at their job or earning no money. If you do a bit of fencing as well it looks even more suspect with the cost of materials so high. 

 

You can still do all jobs. I did a tiny  £100+VAT stump grinding job last week at a small private house. So it makes no difference. 

 

If you quote for decent work against decent companies then everyone should be VAT registered anyway (that's gonna cause some offence!).

 

Regarding cash flow. It's sometimes nice to do the return, wait till the 10th of the following month when the VAT comes out the bank. Then get some unpaid invoices paid at the end of that month where you get to keep all the VAT, it feels like winning the lottery.  

Good post.  Except the last bit.  I tried that, but found its too easy to suddenly find yourself with a shortfall in the following tax quarter if you're not careful.  Its easy to forget 20% of your money in the bank isn't yours.  Suddenly getting hit with a 5k vat bill can quickly make your bank account look a little less attractive.

 

Now I put 20% of all my income into a separate savings account.  With the amount offset each quarter theres always money left in there after I pay my vat, and the savings account after 5 years is starting to look very healthy indeed.

[Radda]

5 hours ago, Stephen Blair said:

I got a VAT review when I first registered in 2002 I think it was a Si was claiming about £8k back on assets, a nice lady turned up, looked through all my receipts and found a further £1100 I hadn’t noticed, no drama job done.

Just shows they are not always out to get you

[donnk]

cash!

 

19 minutes ago, Radda said:

Good post.  Except the last bit.  I tried that, but found its too easy to suddenly find yourself with a shortfall in the following tax quarter if you're not careful.  Its easy to forget 20% of your money in the bank isn't yours.  Suddenly getting hit with a 5k vat bill can quickly make your bank account look a little less attractive.

 

Now I put 20% of all my income into a separate savings account.  With the amount offset each quarter theres always money left in there after I pay my vat, and the savings account after 5 years is starting to look very healthy indeed.

do monthly vat. it doesnt build up then.

[Jonny69]

7 hours ago, Radda said:

Good post.  Except the last bit.  I tried that, but found its too easy to suddenly find yourself with a shortfall in the following tax quarter if you're not careful.  Its easy to forget 20% of your money in the bank isn't yours.  Suddenly getting hit with a 5k vat bill can quickly make your bank account look a little less attractive.

 

Now I put 20% of all my income into a separate savings account.  With the amount offset each quarter theres always money left in there after I pay my vat, and the savings account after 5 years is starting to look very healthy indeed.

That is the sensible thing to do. I like the thrill of living life on the edge   

[kevinjohnsonmbe]

7 hours ago, Radda said:

Just shows they are not always out to get you

Don't fall for it.....  It's a con!  

 

She was probably a plant (or got fired straight afterwards for being 'nice'), you know just to generate an urban myth that Hector isn't a twat.  

 

Throw in a 'good news' story once in a blue moon and folks will lower their guard - then BAM, they're all over you like a tramp on chips.  

 

 

[inthewoods]

23 hours ago, Jonny69 said:

 

 

then everyone should be VAT registered anyway (that's gonna cause some offence!).

Why should businesses be (as I see it) penalised for doing well? Or does it work for most of you! 

[LeeGray]

15 hours ago, kevinjohnsonmbe said:

Don't fall for it.....  It's a con!  

 

She was probably a plant (or got fired straight afterwards for being 'nice'), you know just to generate an urban myth that Hector isn't a twat.  

 

Throw in a 'good news' story once in a blue moon and folks will lower their guard - then BAM, they're all over you like a tramp on chips.  

 

 

I've only had one vat inspection in 13 years and they seemed alright. Everything was in order (as it should be anyway) they just went through everything I had in paperwork and data records. Didn't have to claim or repay anything. Can't see what the worry is.

 

As has been said before, if HMRC turn up and you've got three lads working for you full time as out of an industrial unit with 2 vans on the road, all the gear and a fancy pick up and not vat registered then it's not going to go well for you but if you're doing it right how can there be any issues?