Vat and reselling query

[Seanoc]

Hey just a quick one

 

Been buying logs and coal at 20% vat as a reseller 

 

Not charged vat onwards as not registered

 

My question is.. 

I am looking at becoming vat registered as I can claim the 20% vat back and charge 5% onwards to customers burning domestic. Then I can submit a vat claim and will be owed money bsck by hmrc is that correct? 

 

Thanks

[gdh]

That's right, if you're a reasonable sized firewood business it's worth going Vat registered because most quarters you'll get to reclaim more than you pay.

 

After making tax digital came in a few years ago you have to submit all invoices and bills (they can be a copy of paper ones) online every quarter to do the return.

[Steve Bullman]

1 minute ago, gdh said:

That's right, if you're a reasonable sized firewood business it's worth going Vat registered because most quarters you'll get to reclaim more than you pay.

 

After making tax digital came in a few years ago you have to submit all invoices and bills (they can be a copy of paper ones) online every quarter to do the return.

Not quite accurate. There’s no requirement to submit all invoices and bills physically. You should have them in the event of a vat investigation though

[gdh]

Just now, Steve Bullman said:

Not quite accurate. There’s no requirement to submit all invoices and bills physically. You should have them in the event of a vat investigation though

Sorry, I meant an online copy of physical bills. I put a reference number on them then make a duplicate on Xero for the vat workings.

[Dan Maynard]

Does show up though, it's pretty hard work the be VAT registered if you're still doing accounts with a shoebox of receipts. If you're already doing QuickBooks, Xero, Freeagent etc then should be straightforward - just need to be more careful to correctly enter the tax amounts and rates on incoming and outgoing invoices.

[waterbuoy]

I still work on the box of receipts principle and process my accounts using an excel spreadsheet.  This has a 'front end' page from '123 sheets' which deals with the digital side of things re submissions etc.

 

During the three VAT investigations that I have had they took great interest in the physical versions of my invoices - less so wrt to the electronic ones as they are harder for them to sort through.

 

By way of context I have about 700 transactions a quarter to process so not too bad.

[Vedhoggar]

4 hours ago, Seanoc said:

Hey just a quick one

 

Been buying logs and coal at 20% vat as a reseller 

 

Not charged vat onwards as not registered

 

My question is.. 

I am looking at becoming vat registered as I can claim the 20% vat back and charge 5% onwards to customers burning domestic. Then I can submit a vat claim and will be owed money bsck by hmrc is that correct? 

 

Thanks

If you state a charge for deliver then there’s another 20% on top of the 5%, so 25% more expensive than someone not vat registered. 

[Seanoc]

Thanks all, thought as much - just wasn't sure if there was a catch with hmrc 

[Seanoc]

25 minutes ago, Vedhoggar said:

If you state a charge for deliver then there’s another 20% on top of the 5%, so 25% more expensive than someone not vat registered. 

ah i dont charge for delivery. thanks for the info through :) 

[Justme]

1 hour ago, Vedhoggar said:

If you state a charge for deliver then there’s another 20% on top of the 5%, so 25% more expensive than someone not vat registered. 

Er not sure thats how it works.

 

5% of the fuel & 20% just on the delivery.

 

Not 25% on all of it.

 

For just firewood sellers that do no other work.

You buy at 20% & sell at 5% then unless you have quadrupled the cost of the wood your the same cost as non vat registered. Plus you get to claim all the other bits so could actually be cheaper than non vat registered.

 

If vat registered

Buy a lorry load for £2200 plus 20% total £2640. but you claim back the 20% so still only cost £2200.

Lets assume that makes 40 IBC,s which costs £55 for the wood & you sell at £120 + vat = £126.

You make £65.

You never in effect paid the 20% & pass on the 5% (£6) the customer paid.

 

If not vat registered  each ibc costs you £66 for the wood.

To make the same £65 your selling at £131

 

Then after you get the vat back on tools & fuel your even better off being registered.

 

For firewood only you can be cheaper if registered & it will open up more trade sales.