to vat or not to vat

[DN22 Gardening]

hi all,

 

just read the "business advice" thread and some of the comments regarding vat registration really made me chuckle.

 

if we take two sole traders, who have the same equipment, same overheads, do the job to the same standards, in the same time.

 

yes, at the end of the year, the vat reg firm will be better off.

 

BUT, purely working the domestic side of things, quoting against each other, the non vat firm will win every time.

 

mrs miggins up the road couldn't give a monkeys if you can claim the vat back for your shiney new 880, all she cares about is the fact that her tree needs removing and firm A wants to charge her £600, and firm B wants to charge her £720 (£600 +20%)

 

now if we tweek the formula so firm B charges £500 including vat, things look even worse, as they'll have to pay the vatman his slice.

 

Yes, firm B can claim the vat back on the new 880 and put the rest into capital expenditure, but firm A can claim the whole lot (saw and vat) against their profit.

Plus firm A hasn't got to worry about Mr. Vat man coming knocking to do an inspection. A mate of mine has just been investigated and its been three years of hell. High court appearances, letters accusing him of fraud, you name it.

Just finished the process now, no action taken against him.

 

As for larger firms not wanting to spend large ammounts with non vat reg'd firms, thats total rubbish.

one of the first jobs i won when i went on my own was a £5k job, which spiralled, over two years, to over £30k. One of the last ones we won before going Ltd ( and vat reg'd) was a two week £15k job for one of the uk's largest construction co's. we beat three of the largest tree co's in the country. Not bad for a guy with a rusty old LDV....:lol:

 

 

 

 

 

 

 

Sorry guys, just playing devils advocate.

[WorcsWuss]

It's a simple thing... if most of your customers aren't VAT registered, you probably shouldn't go VAT registered.

If most of your customers are VAT registered, you takes your choice. You should be better off at the end of it because instead of charging £500 you charge £500 + VAT.... which makes no difference to you.... but your VAT reg'd customer doesn't care if you charge VAT either, they get it back anyway.

But you can get back that 20% you pay on top of your purchases.

Everyone needs to take a look at their own books and decide what works for them.

 

PS... have you traded up the rusty old LDV now?!

[likeitorlumpit]

throw this into it

firm B would be charging more like £550 + VAT as they are claiming their input tax and so their ex vat price would be lower.

A lot of the reasons for registration are that without becoming a cash trader you almost have no option as your turnover in tree work quickly rises over the registration limit.

[gensetsteve]

If most of your customers are commercial and you supply logs to domestic market and you need alot of new toys it will work very well for you.

[DN22 Gardening]

no Worcswuss,

 

mores the pity, we've got a couple of new transits and they're not half the van the old LDV was.

 

in the four years we had it, all the LDV needed was three tyres, a clutch and clutch cable.

it never once wouldn't start, it pulled like a train (upto its 50mph top speed), it carried anything we ever put on it, over all types of terrain. but it definately looked like its nickname. the pik** bus..

 

lol. soz mr bullman, not being racially aggressive, that WAS what everyone called it.

 

the transits get through tyres like there's no tomorrow, have spent an average of three weeks a year in the garage, get stuck on grass if there's even a hint of moisture, are nice to drive, quiet, and we defo won't be getting anymore

 

 

 

 

thanks for asking

[WorcsWuss]

no Worcswuss,

 

 

 

the transits get through tyres like there's no tomorrow, have spent an average of three weeks a year in the garage, get stuck on grass if there's even a hint of moisture, are nice to drive, quiet, and we defo won't be getting anymore

 

 

 

 

thanks for asking

 

More power than you can handle clearly

 

I had a chuckle the other day, passed a LDV 400 van weaving around a dual carriageway.... looking into the cab were what I presume to be 2 Nigerians or other central African gentlemen merrily bobbing along.... They were clearly not yet settled, their lane discipline and sunny demeanor suggested they hadn't been here long.... but what a shame for them, that their first experience of British transport was a rusty old LDV.... at least it gave them plenty of time to take in their new surroundings!

[DN22 Gardening]

lol

you might be right with the pickup we've got, but if you'd ever driven our chip truck, you'd realise the folly of your comments

 

the ldv was a racing car by comparison.

[DN22 Gardening]

the old girl in all her glory

[Johny Walker]

the old girl in all her glory

 

proper chipper:thumbup1:

[Fencing]

My understanding is it doesn't really matter if you want to be VAT or not, the second your turnover hits the limit you have to register ?