newly vat registered how to approach customers

[mitchel]

Hello,

 

I have recently gone vat registered and have 8 weeks worth of work already booked in before I went vat registered. Finding it hard to get customers to pay the vat, i'm not sure wether I can absorb the 20% on all the next 8 weeks worth of work. any help would be much appreciated how others handled this situation?

 

Thanks

Mitch

[scraggs]

Did you not know you were going to register beforehand ?
Pretty much the only thing you can do imo is suck it up on the private jobs, it's not really for the customer to pay 20% extra, or cancel them which won't look good.
Any business customers won't care if you add it.
You need to bare in mind that putting 20% on is not what you should really be doing, you will be reclaiming vat back on things so you need to deduct an appropriate proportion from the 20% you are trying to charge your customers.

Edited November 9, 2021 by scraggs

[maybelateron]

This is a no brainer to me. You can't expect a customer to suddenly agree to paying 20 per cent more than the original quote. All they would see is that they are being asked to pay 20 per cent more, doesn't matter if it is going to HMRC or the monster raving loony party, they are still paying it. I had the same situation 8 years ago, but had anticipated that VAT registration was looming, so I made it clear with quotes around that time that VAT might be added, and take it or leave it.

[mitchel]

8 minutes ago, scraggs said:

Did you not know you were going to register beforehand ?
Pretty much the only thing you can do imo is suck it up on the private jobs, it's not really for the customer to pay 20% extra, or cancel them which won't look good.
Any business customers won't care if you add it.
You need to bare in mind that putting 20% on is not what you should really be doing, you will be reclaiming vat back on things so you need to deduct an appropriate proportion from the 20% you are trying to charge your customers.

To be honest it crept up on me and I miss interpreted the 12 month rule I thought it was April to April not a rolling 12 months.

 

 

ill have a look at what I can claim vat back on the month and see if that will work

[scraggs]

2 minutes ago, mitchel said:

To be honest it crept up on me and I miss interpreted the 12 month rule I thought it was April to April not a rolling 12 months.

 

 

ill have a look at what I can claim vat back on the month and see if that will work

Get your accountant to check, but you used to be able to claim vat back on major purchases for 3 years prior to registering date.

Edited November 9, 2021 by scraggs

[butters]

The reclaim on all previous big purchases should out way the loss you’ll make on the 8 weeks of work.

Plus from now on all purchases you make will be 20% less and it’s surprising how much it all adds up when it comes to the end of the quarter. You’ll be fine just a new learning curve!

[kevinjohnsonmbe]

Have you talked to your own accountant or (even as I hate to say it) HMRC?

 

If you quoted prior to VAT reg, is there any flex to allow those contractual obligations to stand? I mean from HMRC perspective?

 

I know it’s a long shot but there might be a reg somewhere which covers this. 
 

You won’t be the first, but it is a bit of an own goal. 

[kevinjohnsonmbe]

Just seen this:  

VAT on Quotes pre registration

WWW.ACCOUNTINGWEB.CO.UK

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Client quoted for work ex vat prior to vat registration. Just wanted to confirm the following:1. If quote provided prior to...

 

[Jonny69]

On 09/11/2021 at 21:26, mitchel said:

Hello,

 

I have recently gone vat registered and have 8 weeks worth of work already booked in before I went vat registered. Finding it hard to get customers to pay the vat, i'm not sure wether I can absorb the 20% on all the next 8 weeks worth of work. any help would be much appreciated how others handled this situation?

 

Thanks

Mitch

You will have to absorb 16.66%, not 20% as you are knocking the vat off the total. 

[openspaceman]

2 hours ago, Jonny69 said:

You will have to absorb 16.66%, not 20% as you are knocking the vat off the total. 

good maths and it's also better than that because you will be reclaiming 20% on inputs, like petrol and diesel.