Voluntary VAT registered, is it worth it?

[18 stoner]

Just wondering what the pros and cons are for going into VAT for a tree surgery set up selling a good bit of firewood.

 

Any one got experience of it, good or bad, is it worth the extra hassle and price rises to your clients?

[Johny Walker]

i think vat limit is £70k ish ,i do all right with out going ther, so depends on wer you wont to go ,we looked @ the vat thing a few yrs bk ,i didnt wont the extra paper work & hassle ,i hate paper work on a good day ,if doing stuff wer you can claim a fiar lump bk it would be good ,not for me i think it suits differant folk & how they like to work:001_smile:

[santacruz]

Your costs go down on things like diesel and tools, but your cost to private customers go up. Its win win if every one you work for is VAT registered, as they can claim the VAT they pay you back. As for firewood the rate on domestic fuel is 5% so if you go VAT the price increase to your customers wont be horrendous.

[gensetsteve]

All your activities will be vat applicable. But if you are just doing firewood and buying in cord wood its a nobrainer I would look seriously at doing it. You can claim back all the 17.5% on cord wood machines diesel vans etc. If you get your wood free I would say maybe dont do it. It does not increase the price to the customer and your pubs and businesses can reclaim the vat you charge. There is not a great deal of extra paper work and it disiplines you to doing you accts every 3 months.

[Frank]

If it cost you in VAT to extract the timber and cost you in VAT to haul the timber and cost you in VAT to store the timber and cost you in VAT to process the timber and cost you in VAT to advertise the timber and cost you in VAT to deliver the timber. The. It's a no brainer.

You could claim back quite a tidy sum every 3 months.

 

If it's Arb arisings stored for free at a local farm and processed by a petrol log splitter by yourself and casual labour and then delivered on your way home then, you might find your self with a bill to pay every 3 months.

 

If you turnover more than 70k, you HAVE to go VAT reg.

[18 stoner]

Cheers for the replies so far, but there seems to be more emphasis on firewood.

 

At present firewood is only a small part of my turn over and I dont buy in cord. Its all tree surgery waste at present.

 

My main concern is that the large majority of my tree work is domestic, Parish Councils and Churches. None of which are VAT reg. In 2011 the rate is increased to 20%, therefore jobs usually costing say £800 will then become £1000. A massive hike IMO.

 

But, as the business grows is it feasable to claim back VAT. My main VATable outgoings at present are fuel and machinery, vehicles etc.

[gensetsteve]

Cheers for the replies so far, but there seems to be more emphasis on firewood.

 

At present firewood is only a small part of my turn over and I dont buy in cord. Its all tree surgery waste at present.

 

My main concern is that the large majority of my tree work is domestic, Parish Councils and Churches. None of which are VAT reg. In 2011 the rate is increased to 20%, therefore jobs usually costing say £800 will then become £1000. A massive hike IMO.

 

But, as the business grows is it feasable to claim back VAT. My main VATable outgoings at present are fuel and machinery, vehicles etc.

 

I would say dont do it or look really carefully.

 

What a lot of small businesses forget is if you buy a van for 10 k inc vat you put 50% in the first year against tax or 5 k . But if you are vat registered after vat you would only be putting 4k against tax . So its not as unfair on non vat registered people as it first looks. Hope this makes sense will try and explain it better if not.

[gensetsteve]

Forgot to mention if you are getting near 70k you can make the wife a partner then it doubles to 140k before you need to register.

[Stephen Blair]

just do the maths, your cost doesnt need to go up 17.5%, the vat is but the money you are saving by claiming it back can get taken off your charge.

[18 stoner]

I get what you are saying Stevie, but I would only do it if it was a benifit to me and I would doubt in my situation I would drop the cost as a result.

 

On another line of thought, do you need to give notice to your clients if you go VAT registered, or can you just add the VAT onto previousy agreed contracts?