Voluntary VAT registered, is it worth it?

[Yorkshireman]

You can claim back 17.5% soon to be 20%

 

if selling to private customers as a fuel

then vat chargeable is only 5%

 

if its for resale ie supplying a garden centre then you charge at full vat rate

 

hope this helps

Edited October 23, 2010 by Yorkshireman

[Robert_S]

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

 

..........or reading this thread, the vat and tax man are not daft they know more than you think you are better to stay on the correct side of them.

[Kev Stephenson]

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

 

But you need to have the ability to prove which company owns what, I don't want to be looking over my shoulder all the time and having to think which set of accounts do these 3 chains need charging to?

 

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

 

But Stephenson Tree Services isn't VAT registered so Huddersfield Logs can't claim back the VAT making the whole exercise pointless.

[18 stoner]

But Stephenson Tree Services isn't VAT registered so Huddersfield Logs can't claim back the VAT making the whole exercise pointless.

 

Yep, thats what i was trying to splutter about here. Cheers Kev.

 

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.

[18 stoner]

Ok, i have a little more time now so see if i can explain better.

 

I currently am using tree surgery arisings, processing quite old school, more of a "wet day" type of job. It has however increased turnover dramatically each year since i started logs again some 3 or so years back.

 

So although there would be a relatively low price rise to the customer (5% vat), the reclaim value would also be quite small as i have no real puchase benifits available, low machinery value and low fuel costs.

 

Because of the above, i cant see much benifit having the firewood side vat reg.

 

So going back to my point earlier, it would be mainly the tree surgery side i would be interested in as its the main part of my work and has greater outgoings that i could claim the VAT back.

 

Also, if i had outstanding contracts with clients, could i add VAT to those previously arranged terms, or would that have to be carried out by the "old business"?

[Frank]

It's an interesting one. Im not sure although I would assume that as soon as you go VAT reg that you have to charge VAT on all services provided from that point onwards. Even if the work had been arranged prior. Would be interested to know the exact answer.

 

Yorkshireman is usually quite up on these things. Maybe he can help out.

[Kev Stephenson]

If I was doing your tree work each month and suddenly my bill to you went up by 17.5% are you just going to pay up and say nothing? Thought not!! Even on negotiated work that you have won I would be informing people as you will lose some if you won it on price. No problem Mr Jones, your trees will be delt with for £400. He then gets a bill for £470 as you have gone VAT registered between quoting and doing. He is going to be pee'd off.

 

Is your work mainly domestic or commercial?

 

Would your day rate change if you were reclaiming VAT? e.g 'reduce' from £400 a day to £350 a day + VAT or are you just hoping to increase your turnover by 20% and pay the VAT man a small portion of that?

Edited October 23, 2010 by Kev Stephenson

[18 stoner]

If I was doing your tree work each month and suddenly my bill to you went up by 17.5% are you just going to pay up and say nothing? Thought not!! Even on negotiated work that you have won I would be informing people as you will lose some if you won it on price. No problem Mr Jones, your trees will be delt with for £400. He then gets a bill for £470 as you have gone VAT registered between quoting and doing. He is going to be pee'd off.

 

Funnily enough Kev, that exact scenario happened to me with less than 24 hrs notice.

[18 stoner]

Is your work mainly domestic or commercial?

 

Would your day rate change if you were reclaiming VAT? e.g 'reduce' from £400 a day to £350 a day + VAT or are you just hoping to increase your turnover by 20% and pay the VAT man a small portion of that?

 

As far as my clients go Kev, I would say over 90% of them would not be able to claim it back. Mostly being domestic or parish councils, churches etc. Very little vat reg commercials.

 

I doubt i would lower any day rate, as at the moment with rising costs I believe keeping the same would be fair.

[gensetsteve]

If you are sole trader and not limited you will be personally vat registered so everything you do will be applicable. I cant see you being vat registered will be a problem to your log sales. The 5% going out you will get back on fuel savings equipment. Also if you use up all your arisings you could buy more efficent cordwood just make sure you dont have too many private tree surgery customers. The other thing that could throw a spanner in the works is if the government decide to put the vat up on fuel.