Advice for newly V.A.T registered company

[gensetsteve]

I'm thinking of registering for Vat even tough I'm not at the thresh hold. Having just purchased a digger, tractor and post knocker in the last 3 months it does make me cringe when iv paid over 6k on VAT just on those 3 items, probably a case of shutting the stable door after the horse has bolted now!

One way iv thought is to put my prices up at least 10%. Basically going halves on the VAT I have had to pay on machinery to do there jobs without charging VAT!

 

Get on with the vat registration you can claim back the vat on stuff you bought months ago. If it does not work out its harder to de register but it is possible. I would get some good advice soon.

[Burgess]

I think you can backdate as much as 4 years as long as you prove you're still using the equipment. Might be wrong though.

[Matthew Storrs]

Yes, someone told me this, but surely it works both ways, ie you have to pay VAT on the money previously earnt?

[benedmonds]

Unfortunately the flat rate scheme only applies to small businesses with a turnover less than 150K. That will suit you for a newly VAT registered business but may not last too long. Depends how you grow. Sounds like it's worth considering though.

 

Once you join the scheme you can stay in it until your total business income is more than £230,000.

[Steve Bullman]

Yes, someone told me this, but surely it works both ways, ie you have to pay VAT on the money previously earnt?

 

Nope

[Matthew Storrs]

Hmm, im going to look for a good accountant, I feel sure that the amount of money I will get back in VAT on goods for the last 4 years will more then cover their charges!

 

I reckon I'm 50/50 private and commercial.

[Steve Bullman]

You really don't need an account for vat registration...You should have one for your regular books though, they would cover their charges on that service alone

[daveindales]

Hmm, im going to look for a good accountant, I feel sure that the amount of money I will get back in VAT on goods for the last 4 years will more then cover their charges!

 

I reckon I'm 50/50 private and commercial.

 

I think it's last 3 years, least it was when I first registered.

[muldonach]

This has been debated at some length previously - if you are dealing in firewood there is a bit of an anomaly since you can reclaim VAT on inputs (at 20%) but can charge only 5% VAT on the output (for domestic use)

 

Turning to the normal charging scenario you are obliged to charge 20% on outputs but also entitled to reclaim VAT on inputs.

 

Picking some figures out of the air if you are not VAT registered and you presently do GBP 100 of work of which GBP 80 is costs i.e. 20 stays with you

 

Then for VAT purposes you should be able to reclaim up to 13.33 so your costs can reduce to 66.67

 

Add your 20 = 86.67

 

add the VAT = 86.67 * 1.2 = 104.00

 

Obviously very simplistic but the point is that your quote to a non registered end customer need not rise by 20% just because you are VAT registered

 

If you are dealing with a VAT registered concern then you may be able to improve your margin since it is only the nett cost that will concern him.

 

You are obliged to put VAT reg no and VAT amount on invoices - you are not obliged to show VAT on quotes as far as I know

[Pete Hart]

 

You are obliged to put VAT reg no and VAT amount on invoices - you are not obliged to show VAT on quotes as far as I know

 

I would be very interested to know if that is genuinesly the case?

 

 

 

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