Voluntary VAT registered, is it worth it?

[Big 'Ammer]

I volutarily registered when I started, on the whole it has been worth it.

 

However, I decided from the off that I intended to do both private and commercial work.

 

I would have had to have registered anyway.

[Quickthorn]

I'm voluntarily registered, but most of the work I do is for organisations that can claim VAT back. I'm much better off because of it, compared to if I were not VAT registered.

 

I did have an accountant for one year, and he gave me a rule of thumb: if 60% or more of your customers are domestic (ie. can't claim the VAT back), then avoid VAT if you can (I've no idea where he got the rule from, or whether it was just his experience).

[Frank]

Don't forget you can claim back all the VAT you have spent for the last 3 years which could be a sizeable figure.

[Kev Stephenson]

If me and you were pricing the same job for Mr Jones in the village who wants his sycamores down and the 2 quotes were £400 from me and £400 +VAT from you who is he likely to go with? £100 is £100 and is better in Mr Jones's pocket.

 

However if you recalculate your costs based on the vat claimback your £400 per day rate may drop to £350 + VAT per day, a net increase of £20 per year (using next years VAT rate), then Mr Jones may look closer at his 2 quotes.

 

Could you not set up the firewood side of the business as a seperate entity? You would need seperate kit for the firewood business and VAT register this leaving your domestic stuff VAT free. I am sure Skyhuck mentioned he used to do this (a commercial business and domestic business) but as the commercial work increased and took most of his time his commercial business bought the domestic one. It's on an old VAT or LTD co thread somewhere.

 

I would agree that unless most of your work is commercial then price wins so stay VAT free if possible, certainly at 20%.

[Rupe]

I've just un registered for VAT. The rule of thumb above is a good one, I don't know where the 60% comes from but its about right. I used to get more than 60% of my work from vat registered companies and organizations and the 40% of domestic work filled in the rest and I didn't mind about the domestic jobs that I didn't get.

 

Durign the recesion the comapnies and organizations all spent far less money, some virtually nothing, so I now had not enough work and was not getting enough domestic work to make up the short fall.

 

Anyway since un registering I am now getting every domestic job I look at (100% success rate since August!!) and to cap it all off the commercial side is picking up again so I will probably have to re register next year some time!

 

What I would say is that I am far happier not charging VAT and not reclaimign any vat. Since I don't buy any products, its only fuel and bits and pieces that have vat on which I now can't reclaim. I have bought all the expensive stuff while I was vat registered anyway. My main cost is wages and storage and theres no vat on that.

 

So I wouldn't dream of volunteering to stay vat registered if I didn't have too, life is far better without it, unless you are buying and selling products that come with vat on them.

[Frank]

Could you not set up the firewood side of the business as a seperate entity? You would need seperate kit for the firewood business and VAT register this leaving your domestic stuff VAT free.

 

I assumed that had already been done. Hence East Yorkshire Firewood Supplies.

[Kev Stephenson]

I run Huddersfield Logs and Stephenson Tree Services, the first is just a part of the second for accountancy purposes and exists more for advertising than anything else. My phone has not stopped ringing for logs since spending £6 ish on the domain name and a couple of hours building a web site.

 

I can't however run it as a seperate business unless I have saws for firewooding and saws for the tree work otherwise which set of accounts do you put them in?

[Frank]

I run Huddersfield Logs and Stephenson Tree Services, the first is just a part of the second for accountancy purposes and exists more for advertising than anything else. My phone has not stopped ringing for logs since spending £6 ish on the domain name and a couple of hours building a web site.

 

I can't however run it as a seperate business unless I have saws for firewooding and saws for the tree work otherwise which set of accounts do you put them in?

 

Huddersfield logs could rent saws from Stephenson Tree Care. Possibly? Haha

[18 stoner]

Yes, i see the point Kev, and although i set up EYFS three years ago, as Darren says I intended it being a seperate entity. However it was never seperated in the books, just more of an advertising front.

 

As for the vat on the firewood side, Im not sure i could claim much vat back from it say i bought the wood from the tree surgery side, i couldnt charge vat, very little machinery costs are involved and little fuel.

 

Will reply more later, rushing out!

[roseyweb]

can't however run it as a seperate business unless I have saws for firewooding and saws for the tree work otherwise which set of accounts do you put them in?

 

Don't matter unless the VAT man is going to be watching you every time you start a saw