VAT Registered

[Conorjm10]

Hi there,

 

I am just looking to see what other business owners experiences are with going VAT registered and having mainly domestic clients. 90% of our work is domestic and I am just coming up to the VAT threshold. I am a little anxious on taking the plunge as it's going to be harder to stay competitive in an already crowded area. What are others experiences? Any advice would be appreciated.

[Mark J]

1 hour ago, Conorjm10 said:

Hi there,

 

I am just looking to see what other business owners experiences are with going VAT registered and having mainly domestic clients. 90% of our work is domestic and I am just coming up to the VAT threshold. I am a little anxious on taking the plunge as it's going to be harder to stay competitive in an already crowded area. What are others experiences? Any advice would be appreciated.

People pay VAT on most things. You may find you win more profitable work as a result. Being VAT registered indicates a level of integrity, which people like.

[Conorjm10]

4 minutes ago, Mark J said:

People pay VAT on most things. You may find you win more profitable work as a result. Being VAT registered indicates a level of integrity, which people like.

Very fair comment, I think I'm only really focusing on the negatives, I didn't see it from that point tbh. Thanks!

[Mark J]

9 minutes ago, Conorjm10 said:

Very fair comment, I think I'm only really focusing on the negatives, I didn't see it from that point tbh. Thanks!

Also get a decent accountant if you don't already have one. It may be that you are able to claim back the VAT you've paid on some of your pre-existing assets.

[kevinjohnsonmbe]

56 minutes ago, Mark J said:

People pay VAT on most things ✅. You may find you win more profitable work as a result ✅. Being VAT registered indicates a level of integrity which people like (not sure sure about that but I get what you mean and ½ agree - can't be seen to 100% agree Mark, that would upset years of solid antagonistic banter ?)

 

36 minutes ago, Mark J said:

Also get a decent accountant if you don't already have one. It may be that you are able to claim back the VAT you've paid on some of your pre-existing assets ✅ (up to 5 years worth of previous VAT qualifying capital expenditure)  

Plus, as has been said many times before, your operating costs will be reduced by the element of VAT that you currently pay and DON'T reclaim which you will continue to pay but then reclaim.  That gives you an element of flexibility to 'trim' prices for selected existing clients if (and only if) they press for negotiation on prices AND you want to retain them on the client list.

 

Much better to have the ability to do more trade AND reclaim VAT rather than fret over keeping business down so as not to inadvertently break through the VAT threshold.  

 

Just an opinion - others may differ!

[benedmonds]

Consider the Flat Rate Scheme too.

[maybelateron]

I had to register for VAT 7 years ago due to increased turnover. My turnover is now beneath the threshold consistently, but I would not consider de registering - I agree with everything said so far in this thread. I was able to reclaim VAT on previous investments (but not day to day costs eg fuel/repairs), I think going back three years. Like the OP I am mainly domestic work biased. Customers who we have worked for before accept they have to pay VAT on my work, and I don't want customers who insist on avoiding VAT by "paying cash". If I sense a potential new customer may be this way inclined I quote them the total cost, inclusive of VAT, without pointing out my VAT status. If they look closely at my quote/letterhead they will see the VAT reg number at the bottom in small print, as this is a legal requirement to show it. If the potential new customer indicates that they know I am VAT registered and pushes for losing the VAT for cash, I play along with them, but quote the full amount including VAT then put it through the books. Try telling the cashier at B and Q you want a discount for cash?. If you are reliable, do quality work at a fair price to yourself and the customer you should be fine. Regarding submitting the quarterly VAT return this literally takes me no more than five minutes, as I run a simple to use accounting programme (Moneydance). Investing in better newer kit is also so much less painful when VAT registered!

[green horn]

.1h1jz

[treevolution]

1 hour ago, benedmonds said:

Consider the Flat Rate Scheme too.

Unfortunately you would be worse off financially on the Flat Rate Scheme now as a tree surgeon since they changed the rules. 

 

It can be  daunting going VAT registered and you do worry about losing work but I found I only ever lose the jobs the customer want the cheapest quote and does not care who's does it. 

 

It's worth each week just adding up the VAT you have collected and putting it to one side ready for when you have to pay it. 

 

 

[Matthew Storrs]

But then to play devils advocate, two Reputable contractors Come to your house to quote for a tree, one is £3000 and one is £3600, who would you go with?

im not vat registered, i work on my own doing digger work, fencing etc, i went vat registered last year and promptly de-registered, just didn’t feel it was the right thing for my buisness and customer base. I would have deffo benefited when it came to buying machinery etc if I had stayed registered, But in terms of quoting against vat registered contractors I felt I was always going to be able to be more competitive,  and customer essentially ‘pays’ for the vat on machinery anyway. Plus more time spent doing vat returns, or paying accountant etc.