VAT Registered

[Hodge]

Because it’s a shit system, I believe all buisnesses should be the same, they either all pay vat or they don’t. Whilst it’s like it is, customers are always going to view VAT as an add on when other contractors are not having to charge it.

Agreed, I have written many times to my local MP asking him to raise the question of the VAT threshold with the PM. In my humble opinion if the VAT registration threshold was £10 grand then pretty much everybody in any trade will have to register, this would mean more money for the country and a more level playing field for the trades, it would also benifit all the trades now they are registered as they would be able to get the VAT back on fuel, phone, purchase of equipment etc. I did get a reply off the MP which came from the chancellor that basically said no. They are a bunch of muppets and they don't see the wider picture.

[Hodge]

I was in this boat a few years ago, and I had to register, it wasn't the best thing for me at the time and I ended up de registering after about 18 months. That's when things got difficult. Trying to run a busy tree company and staying under VAT was difficult, I was always having to watch my rolling 12 months which became hard work, a constant battle and it got to the point that when COVID came my work load went through the roof and I went over the threshold by a lot. I had to register. Luckily I have a good accountant, I claimed back over 10k in purchases, we went to the VAT people and explained I had work booked in and accepted before I had registered and we were able to come up with an acceptable outcome so I didn't have to loose money on jobs as I'd already quoted. It's going ok now. Most quotes I send include vat on the figure rather than saying plus VAT. This seems to work, I've lost a few jobs but then I have gained a few also. Because of the pandemics lot more people don't have cash and also I can't spend cash very easily so I say that I can accept cash but it won't make the job cheaper. A lot of people also see that the government spent billions on furlough etc and they don't mind paying VAT as they see they are helping the country.

VAT is not as bad as you thing and you just have to make it work for you.

[maybelateron]

On 03/09/2020 at 08:15, doobin said:

If you have any domestic customers you always loose with vat. No if no buts.

I beg to differ. I went VAT registered 8 yrs ago. We are 95% domestic, and are never short of work. Also being able to reclaim VAT on expenses can help to some extent as it reduces running costs compared to not being VAT registered.

[Mick Dempsey]

14 minutes ago, Hodge said:

I was in this boat a few years ago, and I had to register, it wasn't the best thing for me at the time and I ended up de registering after about 18 months. That's when things got difficult. Trying to run a busy tree company and staying under VAT was difficult, I was always having to watch my rolling 12 months which became hard work, a constant battle and it got to the point that when COVID came my work load went through the roof and I went over the threshold by a lot. I had to register. Luckily I have a good accountant, I claimed back over 10k in purchases, we went to the VAT people and explained I had work booked in and accepted before I had registered and we were able to come up with an acceptable outcome so I didn't have to loose money on jobs as I'd already quoted. It's going ok now. Most quotes I send include vat on the figure rather than saying plus VAT. This seems to work, I've lost a few jobs but then I have gained a few also. Because of the pandemics lot more people don't have cash and also I can't spend cash very easily so I say that I can accept cash but it won't make the job cheaper. A lot of people also see that the government spent billions on furlough etc and they don't mind paying VAT as they see they are helping the country.

VAT is not as bad as you thing and you just have to make it work for you.

Re. the not stating the price includes VAT on the quotes.

I’m not sure that’s legal.

 

Tell a lie, looks like it is, just googled it.

Edited September 17, 2021 by Mick Dempsey

[Retired Climber]

If you want to run a business you are going to need to register for VAT. If you want to play at having a business you may not need to. 

[doobin]

5 minutes ago, maybelateron said:

I beg to differ. I went VAT registered 8 yrs ago. We are 95% domestic, and are never short of work. Also being able to reclaim VAT on expenses can help to some extent as it reduces running costs compared to not being VAT registered.

 

If you are VAT registered, you must collect 20% tax on all your turnover, whilst only being able to reclaim 20% of your costs. A non vat registered company can charge this extra 20% as 'the going rate', and keep it. Sure, they can't relaim VAT, but that's only on a proportion of their turnover, and plenty of suppliers to small businesses may not be VAT regeistered anyway. So dependant upon profit levels, they'll probabbly be around 15% up on the VAT registered company.

 

I did then go on to list harder to quantify benefits of being registered, but in pure figures being VAT registered leaves you less profit if a non registered firm is able to do the job for the same price

[Hodge]

Re. the not stating the price includes VAT on the quotes.
I’m not sure that’s legal.
 
Tell a lie, looks like it is, just googled it.

I should of said that I don't show it as a separate figure, I put it as £575 this includes vat and waste removal.....

[Mick Dempsey]

@doobin
You’re forgetting the VAT that the non registered company has had to swallow on purchases of chipper, grinder, loader, vehicles etc, thats in the 10s of thousands of pounds.

Edited September 17, 2021 by Mick Dempsey

[Rough Hewn]

If you want to run a business you are going to need to register for VAT. If you want to play at having a business you may not need to. 

Absolute rubbish.
Did you open your business on day one with 90k turnover?

[doobin]

46 minutes ago, Mick Dempsey said:

@doobin
You’re forgetting the VAT that the non registered company has had to swallow on purchases of chipper, grinder, loader, vehicles etc, thats in the 10s of thousands of pounds.

Good point. This surely reinforces my original post (Holy thread revival, Batman!) whereby I implied that being more profitable via the use of machinery is encouraged by VAT registration, yet this benefit is hard to quantify.

 

If a non registered company has swallowed VAT of tens of thousands on the machinery you list, then that implies (say two tens of thousands, 20k VAT) the purchase of assets worth 100k, and they are big enough to be VAT registered without worrying about it.

 

Non VAT registered competition is a secondhand Transit and old Timberwolf and maybe a secondhand digger or loader. All these devalue to a lower floor whereby VAT is not really relevant any more, and indeed are often sold by non VAT registered individuals anyway.

 

For a one man band with occasional help, £85k turnover a year with the above kit doing smaller jobs is respectable, achievable, profitable and can make you a thorn in the side of other VAT registered businesess competing in the domestic market.