Vat on firewood

[Hodge]

If I was Vat reg I would pay 20% on the cord I buy but when I sell it on the customer only pays 5%? What happens to the 15% and why is it like this?

[Steve Bullman]

You're looking at it the wrong way. You're asking about 15% like its some sort of deficit. Theres no 15%, it doesnt affect you in any way. The seller you bought from pays 20% to the vat man, and when you sell it you pay the 5%, theres not much else to it than that really.

[Joy Yeomans]

if you were vat registered you claim back your purchase vat by offsetting against your sales vat thats if your purchase vat exceeds vat on sales otherwise you pay over your sales vat less any purchase vat in each quarter

 

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[StephF]

When you are vat registered you can claim back 20% on all delivery fuel, vehicle costs and new machines etc!

[Justme]

You buy wood at £100 plus 20% vat & sell at £300 plus 5% vat

 

What happens is this:-

 

You pay £100 + £20 VAT to your supplier

 

Your supplier pockets the £100 & pays the £20 to the VAT man (minus his VAT purchase costs)

 

Your customer pays you £300 + £15 VAT

 

You pay the VAT man the sum of your VAT collected minus the VAT you paid out, so the VAT man PAYS YOU £5 as well.

 

So your profits INCREASE by being VAT registered.

 

Add in all the other bits you can claim back the VAT on (fuel, oils & tools) & you should be much better off being VAT registered.

[Hodge]

I get it now thanks. I'm not vat reg.

[Joy Yeomans]

i would thibk very carefully if you are not at the vat threshold about voluntarily registering as it can put off some customers if youhave alot of domestic jobs

 

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[Ian C]

Im going VAT reg as of January, am on the threshold anyway but i was going to anyway, yes i will loose some domestic but what i save will out weigh the loss, at the moment its me tht looses out as every thing i buy has VAT. I reccon i have about 8k to come back over the last 3 years.

[cooper]

I see it like this ..

Pay out £100 for timber plus £20 vat

Claim back the £20.

Cost of timber £100.

Sell logs for £300 + £15 Vat

Send tax man £15 total left £300.

Profit £200. I cant make it £205.00 How am I £5.00 better off?

[cooper]

Edit ..I see what you mean about the £5.00, it was just the way I read it....Thinking about a new job as an accountant now