newly vat registered how to approach customers

[jfc]

Speak to your accountant, I went vat reg this year but had anticipated it and included plus vat (if applicable on quotes).

I am on the flat rate scheme, you only pay hmrc 10.5% of the vat you charge. The rest you keep to balance out vat on purchases. Keeps it simples!

You can claim backdated vat on most purchases and some services,ade before you registered.

You can also claim vat back on any future purchases over £2k Inc vat. I just did a big order from an arb retailer and will get vat back on that.

Did I say speak to your accountant!

J.

 

 

[Duncan.]

On 13/11/2021 at 14:53, jfc said:

Speak to your accountant, I went vat reg this year but had anticipated it and included plus vat (if applicable on quotes).

I am on the flat rate scheme, you only pay hmrc 10.5% of the vat you charge. The rest you keep to balance out vat on purchases. Keeps it simples!

You can claim backdated vat on most purchases and some services,ade before you registered.

You can also claim vat back on any future purchases over £2k Inc vat. I just did a big order from an arb retailer and will get vat back on that.

Did I say speak to your accountant!

J.

 

 

I will need to go VAT registered in the new year so have started to prepare for it and was thinking of going down the flat rate scheme. As you say it seems far more simple. I have a couple questions.

 

Have I read it right that you pay 10.5% on your total income including VAT so £100+VAT= £120

10.5% of £120= £12.60? so you get to keep £7.40 of the Vat charged?

 

As you said flat rate scheme seems so simple and better for me as I did some rough maths and

 

On a turnover of £90000+VAT= £108000 I pay £11340 to the tax man and keep £6660 of the Vat I charge?

 In order to be even or better off than on the flat rate scheme I would need to spend over £33300 to claim back £6660 worth of VAT. Is that correct?

And I can still claim back the VAT on single purchases over £2000 anyway.

 

Hope this makes some sense tell me if it's complete bollocks.

[jfc]

I will need to go VAT registered in the new year so have started to prepare for it and was thinking of going down the flat rate scheme. As you say it seems far more simple. I have a couple questions.
 
Have I read it right that you pay 10.5% on your total income including VAT so £100+VAT= £120
10.5% of £120= £12.60? so you get to keep £7.40 of the Vat charged?
 
As you said flat rate scheme seems so simple and better for me as I did some rough maths and
 
On a turnover of £90000+VAT= £108000 I pay £11340 to the tax man and keep £6660 of the Vat I charge?
 In order to be even or better off than on the flat rate scheme I would need to spend over £33300 to claim back £6660 worth of VAT. Is that correct?
And I can still claim back the VAT on single purchases over £2000 anyway.
 
Hope this makes some sense tell me if it's complete bollocks.

That looks right to me.

An accountant should be able to advise what is best for your biz, but sounds similar to mine and FRS was recommended.

BTW you get an additional 1% back on your first year on Frs. So 9.5% to vat man.

J.

[Duncan.]

1 hour ago, jfc said:

That looks right to me.

An accountant should be able to advise what is best for your biz, but sounds similar to mine and FRS was recommended.

BTW you get an additional 1% back on your first year on Frs. So 9.5% to vat man.

J.

Thanks for that. Are you in forestry or Arb? Did your accountant think that was the closest type of business on the scheme if your in Arb work?

I will be talking to an accountant soon as to get everything in order, just wanted to get a rough idea of what it's all about.

Thanks

[treevolution]

I'm sure the flat rate has now changed and that the rate for a tree company is 16.5% so you would be better paying the full rate at 20% and then claiming VAT on everything. 

 

Its worth reading up on if you are classed as a ‘limited cost business which unless you are buying a lot of materials you won't be and then will have to to pay 16.5% rather then 10.5%.

 

I was on the flat rate and then changed to the full rate as I was worse off financially on the flat rate. 

 

 

Edited November 17, 2021 by treevolution

[Duncan.]

From what I can see on the gov website there is no business at 16.5% only like you pointed out the "limited cost business" which is only applicable if goods cost less than 2% of turnover. The only other type of business it could be classified under would surely be "any other activity not listed elsewhere" which is at 12% so not too bad.

[jfc]

My accountant felt agriculture and forestry was closest to arb, so that's what I'm on.

[treevolution]

Sorry I have not explained it very well. 

 

You would be on the 10.5% rate as a tree company but have to pay a higher rate of 16.5% unless you sent more then 2% of your turnover on goods or materials for work. 

 

You cant be on the 10.5% rate as an arb company as you don't buy goods or materials to do the job. 

 

This is taken for the Gov website. 

 

 

Goods are moveable items or materials exclusively used in your business. You can also include gas and electricity. If you're estimating, give realistic figures.

Don't include:
any services - which is anything that isn't goods
expenses like travel and accommodation
food and drink eaten by yourself or your staff
vehicle costs including fuel unless you're in the transport business using your own, or a leased vehicle
rent, internet, phone bills and accountancy fees
gifts, promotional items and donations
goods you will resell or hire out unless this is your main business activity
training and memberships
capital items for example office equipment, laptops, mobile phones and tablets

[Dan Maynard]

It looks like consumables like electricity, gas, cleaning products are goods though. For arb that to me seems like fuel for saws and chipper, chain oil, chains, bars, rakes, forks, silky saws, climbing ropes etc etc could all be included. Even PPE ?

Haven't looked up numbers but sure I'm easily over 2% on that lot.

[treevolution]

Would be best to get the advice fron a good accountant but from my experience and others I know that where on the flat rate we had to start paying the higher rate of 16.5% which means we were better off paying the full VAT rate and then claiming back VAT on everything.