Re-Registering for Vat

[bythamboy]

I asked the accountants last week about having two businesses to avoid the VAT , the reply was business one sole trader and VAT registered. business two canot be sole trader, but could be a partnership ( silent / wife ) but then there would be two sets of accounts to pay for any gain ?

[Rick2517]

This may not apply for you as you have been registered in the past but when i registered for vat I was able to claim back vat on all purchases made in the past 4 years!!! If this is so then I would hang on u till you hit the fresh hold.

[Stephen Blair]

I was vat reg for over 10 years with no probs, The saving of tax with big expenses isn't much unless it was keeping me out Super tax lol

I will just do it the way the Vat want me too

[skyhuck]

You can do this but hmrc take a dim view of it. You are effectively the same person and it can be seen as tax evasion. Those who say it's fine probably never get checked. Best thing is to speak to a good accountant. As for re-registering, if your turnover is going to take you over the threshold true. You have to re-register. If it's voluntary then you will have to make a case that you are going to go over threshold soon. Just getting the vat back on a load of kit is no good reason In their eyes.All IMHO of course. Speak to an accountant or hmrc.

 

Not true.

 

The VAT man will be more than happy for you to register, regardless of your turn over.

[gensetsteve]

To vat register or not ? surely if your sales to non vat registered businesses or public are greater than any vat -able purchases then its a no brainer keep away from being a tax collecter ( at your expense ) I know big things like chippers are bad news with 20% , but surely the gross price is income tax deductable. We're farmers ,and vat registered but most sales of food are zero rated , the arb work is done part time 2/3 days per week and I have to swallow the VAT because the farm side can't aford to de-register

 

That is a good point that alot of people overlook. The 20% does not just disappear you can claim that against income tax although you will have to wait a year not 3 months.

[Steve Bullman]

not quite the same as getting the whole 100% back though is it!

[gensetsteve]

not quite the same as getting the whole 100% back though is it!

 

No but if you spend £100 inc vat you get £20 back on vat, leaves £80 if you pay 25% tax it costs you £60 or if 40% tax will cost about £48

 

 

If Your not vat reg £100 less 25% means £75 . But if you are approaching the vat limit you are probably paying 40% tax so £100 less 40% = £60 so you are no worse off than a vat reg person only paying 25% tax

[Steve Bullman]

That may be true for the profits over the threshold that fall into the 40% bracket, but what about the other 35k

 

its a poor arguement for not going vat registered IMO

[gensetsteve]

That may be true for the profits over the threshold that fall into the 40% bracket, but what about the other 35k

 

its a poor arguement for not going vat registered IMO

 

Your right it is flawed when you look at the first 35k . But then we are vat registered so dont give it much thought these days. If you have alot of commercial customers buy new toys and buy cord to do logs go vat registered. Hows that

[likeitorlumpit]

My take on it is that the government likes to help young businesses and encourage competition.

So having a £75k vat threshold gives new starts and one man bands a competitive edge in the domestic market where they will usually be learning to hone their trade.

VAT kicks in when you want it to but has to at £75k

You then are in a situation where you are developing and probably employing

So vat isn't your only problem- H&S Risk stuff tickets paperwork etc.

Then they dangle the carrot of Limited liability which is a weight off the shoulders of the business owner- although it comes at a cost (higher accountant fees and bank charges).

Now once in this position there are tax advantages to be had- Pay yourself tax free £7k and take dividends especially as you are then probably in the 40% tax bracket. There are some other benefits.

So to summarise- the whole thing is aimed at progressing your business. i.e, getting bigger - sometimes to the point of just having to do so