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

[Chris Day]

We are flat rate and I find it works for us, pretty sure in the next financial year we will have to go full registration. 

 

In terms of losing work, if you need to register then you are doing alright and must have some kind of client base so you should be alright. Just add the vat in your head before opening your mouth on quotes with domestic work. Don't price low to compensate, I tried that it's not a good idea! As for waiting for pending invoices to meet the bill, I just put all the vat and ten percent of every invoice into a separate account marked vat and tax. We always have enough each quarter and I find we have spare to pay insurance etc without touching business capital. 

 

Chat to your accountant about the practicalities. 

[Mark Bolam]

2 hours ago, treevolution said:

You have to be a limited cost trader to stay at 10.5% which I am not and you will find that most trees firms will also not qualify unless they buy in materials for fencing or landscaping jobs.

 

What is a limited cost trader?

Limited cost traders are defined as one whose gross expenditure on relevant goods is either:

Less than 2% of their VAT inclusive turnover or

Greater than 2% of their VAT inclusive turnover but less than £1,000 per year

The figure should not include the cost of the following items:

Food and drink for the business or its staff

Capital expenditure

Vehicles and fuel 

Wages?

[treevolution]

8 minutes ago, Mark Bolam said:

Wages?

You don't pay VAT on wages.

 

I looked at different ways round it and unfortunately I was better off leaving the scheme.

 

It's a shame as when I was on the flat rate I was better off financially and a lot easier to do your own return and less hassle.

 

I think the government change the rules as a lot of companies had been using it for their own financial gain.

[Mark Bolam]

Sorry mate, missed the point there entirely, I thought all VAT was turnover based.

To stay under 2% INCLUDING wages you’d have to be Amazon, or Ryanair!

My bad.

 

[Mark Bolam]

My tuppence worth is if you’re earning enough to be VAT registered you’re good enough not to worry, which someone has already pointed out.

I’ve been VAT registered before, and they are scary people if you cross them, which I did.

Massive VAT bill, but my Ltd. Company hadn’t been paid a penny.

They literally didn’t give a fuck and would have destroyed me.

Should have been cash accounting but was badly advised back then.

It was a very close call.

The lads advocating putting 20% in a separate account are bang on IMO, then you simply can’t go wrong.

If I was on the way up rather than down going VAT registered wouldn’t bother me in the slightest.

You only lose the lowball customers anyway. Just spend more time at initial quote stage to suss them out if you don’t know them.

Incidentally, I’ve lost jobs by not being VAT registered, as people think I’m a one man and his dog operation.

 

Which is pretty fair, to be honest.

[Steve Bullman]

42 minutes ago, Mark Bolam said:

My tuppence worth is if you’re earning enough to be VAT registered you’re good enough not to worry, which someone has already pointed out.

I’ve been VAT registered before, and they are scary people if you cross them, which I did.

Massive VAT bill, but my Ltd. Company hadn’t been paid a penny.

They literally didn’t give a fuck and would have destroyed me.

Should have been cash accounting but was badly advised back then.

It was a very close call.

The lads advocating putting 20% in a separate account are bang on IMO, then you simply can’t go wrong.

If I was on the way up rather than down going VAT registered wouldn’t bother me in the slightest.

You only lose the lowball customers anyway. Just spend more time at initial quote stage to suss them out if you don’t know them.

Incidentally, I’ve lost jobs by not being VAT registered, as people think I’m a one man and his dog operation.

 

Which is pretty fair, to be honest.

doesn't sound like putting 20% aside would have made much difference in your case if it wasn't coming in anyway.

 

As you say, you were poorly advised.  I know first hand how important it is to have a good accountant on board!

[Mick Dempsey]

I submit accounts and pay my VAT monthly, which is much better than before (both here and in the UK) 

Edited August 27, 2018 by Mick Dempsey

[LeeGray]

13 hours ago, Woodworks said:

No it's Texaco only but never risked supermarket fuel anyway. 

What’s risky about supermarket fuel? Something I should know?

[Steve Bullman]

8 minutes ago, LeeGray said:

What’s risky about supermarket fuel? Something I should know?

nothing!

[Mark Wileman]

30 minutes ago, LeeGray said:

What’s risky about supermarket fuel? Something I should know?

All the fuel garages will tell you it's full of rats piss. I've never had an issue and I always use Tescos fuel, all about the club card points. Plus someone as big as Tesco/Asda isn't going to breach the fuel British Standard to make a few more quid, wouldn't be worth the risk.