Should I be invoicing/collecting VAT

[Gnarlyoak]

I work as a sole trader, providing a freelance tree climbing service. I'm not registered for VAT as I'm not earning anywhere near the VAT threshold. I usually work on a flat day rate and usually invoice accordingly at that flat rate.

 

Question is, should I be including VAT on my invoices and in turn am I liable to pay this to HMRC? If I am responsible for collecting VAT, should I be adding it to my rate or subtracting it from my rate for invoicing purposes?

 

e.g. Say for the sake of argument that my day rate to client A was £100:

 

Should I be invoicing:-

 

A) £100 + VAT (@17.5%) = £117.50

B) £100 inc VAT = my rate would be £85.11 + VAT £14.89

 

or C) Ignore the VAT man and just keep on invoicing at the flat rate of £100

[Graham]

In a word....no. You need to be VAT registered to charge VAT on your invoices and to register you need to be earning over the threshold.

 

It also depends on earnings per quarter. Start to go over the threshold in consecutive quarters then they'll start looking at you. I'm sure someone here will come up with a better explanation than mine though.

[wattie]

Hi looked this up for you at a flat rate of £100 a day then no. I know you have to pay vat on things you buy and it seems tempting to claim it back but it is something you should aviod at all costs a lot of work and stress if you do not put the vat money away to pay.

 

Hope this helps.

 

Keven

 

VAT registration threshold

If you're in business, you must register for VAT if your VAT taxable turnover for the previous 12 months is more than £70,000. This figure is known as the VAT registration threshold. The threshold changes - usually once a year announced in the Budget - so you should regularly check your turnover against the current threshold.

 

You must also register for VAT if either of the following applies:

 

you think your VAT taxable turnover may go over the threshold in the next 30 days alone

you take over a VAT-registered business as a going concern

[Steve Bullman]

you can volunteer for vat registration even if you arent near the threshold.

 

dont know what your setup is, but if you are freelancing to companies who are all vat registered then id personally say it would be worth your while registering anyway.

[bareroots]

VAT registration threshold

If you're in business, you must register for VAT if your VAT taxable turnover for the previous 12 months is more than £70,000. This figure is known as the VAT registration threshold. The threshold changes - usually once a year announced in the Budget - so you should regularly check your turnover against the current threshold.

 

i thought for the year gone it was £68,000?

[tommer9]

Only if you are VAT registered mate.

[AA Teccie (Paul)]

Previously I operated as a self-employed arb consultant who earned no where near the VAT threshold but I voluntarily regsitered as several prospective clients wouldn't have looked at me otherwise. A spin off was I was able to claim VAT back against all sorts and even with paying someone to do my quarterly VAT returns I was still 'in profit' with it.

 

Would I in your position = dunno, as Steve says check with the companies who engage you and if they are VAT registered it will, effectively, have no impact on your day rate but may work well for you.

 

Cheers..

Paul

[Gnarlyoak]

Cheers for the advice lads.

 

I'm more than happy to steer clear of the VAT mire. No one I've worked for has really questioned my "non-VAT" status, just seeking clarification that as a non VAT registered self employed bod, I was'nt unwittingly falling foul of some rule; regulation or law by not adding VAT on my invoices.

 

Thanks again for your time taken and advice given.

Best regards,

Rick

[Steve Bullman]

you should still look into it mate if your customers are vat registered. when i sat down and went through my books it turned out i was spending about £250 a month on average on vat. i get that all back now and it pretty much pays the monthly finance on a brand new navara.

[Stephen Blair]

with the cost of fuel through the roof and kit all plus vat, i think its beneficial as steve says, i have been vat registered for years now and i wouldnt go back. To fill any of my vehicles with fuel its over a£100 now, so i get approx £15. All i did was open another bank account and paid the vat into that, i would just put it in my business account then transfer the vat, i dont now because i am better with my finances. If you keep all your receipts in order and present them to an accountant on time, your vat return is simple or do it yourself, call up your local vat office and they will keep you right.