VAT Registered

[Peasgood]

You just lost £83, I view that as a downside. If most of your customers are domestic there are a lot of downsides like that.

 

I'm registered and most of my trade is commercial so makes no difference fortunately. My return is about to go in and they will be giving me £7k for the last quarter, I have been spending a lot!

[Mark Bolam]

Fair point, if you were mainly domestic It wouldn’t be too clever.

[kevinjohnsonmbe]

10 hours ago, Khriss said:

You just don't understand how much I hate the taxman Steve ?  K

I bet I hate HMRC more!

[kevinjohnsonmbe]

1 hour ago, Peasgood said:

You just lost £83, I view that as a downside. If most of your customers are domestic there are a lot of downsides like that.

 

I'm registered and most of my trade is commercial so makes no difference fortunately. My return is about to go in and they will be giving me £7k for the last quarter, I have been spending a lot!

But you can suck up 84.3 £83 ‘losses’ from smaller domestic jobs out of the £7k per ¼ and still break even! (Less professional feed for accountant - if applicable)

[AHPP]

31 minutes ago, kevinjohnsonmbe said:

But you can suck up 84.3 £83 ‘losses’ from smaller domestic jobs out of the £7k per ¼ and still break even! (Less professional feed for accountant - if applicable)

What's 7k a quarter? Some threshold?

[maybelateron]

12 hours ago, Peasgood said:

The downside is that you have to charge VAT. This means to all your domestic customers you just got 20% dearer. If most of you business is domestic you have to think carefully about it

But because I am VAT registered and can claim my VAT back on most of my expenses, I am reducing my running costs s and can afford to quote a bit cheaper anyway.

[Peasgood]

14 hours ago, kevinjohnsonmbe said:

But you can suck up 84.3 £83 ‘losses’ from smaller domestic jobs out of the £7k per ¼ and still break even! (Less professional feed for accountant - if applicable)

I can't afford to spend so much that I get £7k back every quarter. This was yard

and building construction and a one off. 

You just need to figure out if it works for your situation, sometimes it does and sometimes not . My son's business is nearly over shreshold and it will make him uncompetitive if he goes over as he buys little and entirely domestic customer base. 

[openspaceman]

6 hours ago, maybelateron said:

But because I am VAT registered and can claim my VAT back on most of my expenses, I am reducing my running costs s and can afford to quote a bit cheaper anyway.

This is the nub; the ratio of Vatable inputs to Non vatable inputs. If you only have a few hand tools and climbing kit then vehicles and fuel are your main vatable inputs. If your turnover is 50% vatable inputs and you are Vat registered you are effectively only charging 10% of your turnover as VAT. If you are not VAT registered you cannot reclaim the VAT on 50% of your turnover so you have to recover that by adding it to your charges so it becomes neutral to your client/customer.

 

When I was timber havesting I drew about 20% of my turnover as profit and all my clinets were Vat registered so there was no disadvantage in being registered.

[kevinjohnsonmbe]

4 hours ago, Peasgood said:

I can't afford to spend so much that I get £7k back every quarter. This was yard

and building construction and a one off. 

You just need to figure out if it works for your situation, sometimes it does and sometimes not . My son's business is nearly over shreshold and it will make him uncompetitive if he goes over as he buys little and entirely domestic customer base. 

Understood, I only meant it as an illustrative point. Mostly you have to pass VAT on, but sometimes a rebate arises. 
 

The point was that out of those rebates, when they happen, it’s possible (if you wanted to) to suck up some minor price reductions for domestic customers. 
 

On a side issue, building and yard work? I had some ‘issues’ with HMRC attempting to disallow certain elements of infrastructure which resulted in me taking them to Tribunal - and spanking them ?
 

I’ll have to brush up on the detail but some caution might be advisable claiming building works. 

[Peasgood]

1 hour ago, kevinjohnsonmbe said:

I’ll have to brush up on the detail but some caution might be advisable claiming building works.

Accountant advises VAT is reclaimable but as it is a building only a certain amount can be offset against tax as an expense. 3% IIRC.  Pretty irrelevant in this case as I don't pay a right lot of tax.