Is there money to be made?

[TimberCutterDartmoor]

If you register for VAT you can claim back 20% of the purchase price, but you have to pay 20% of the sale price back to HMRC.

 

If you are running at a profit, then by definition the ouotgoing 20% to HMRC will be more than you claim back on the purchase price. Are you not just becoming a tax collector?

 

As long as your turnover stays below the threshold you're better off not VAT registered.

 

Please correct my maths if I've misunderstood how this works.

 

But firewood is sold at 5% ...? So you're 15% up buying in roundwood + 20%, and then selling logs + 5%.

[muldonach]

As I understand it working as a tree surgeon is primarily selling labour and theres little VAT to be reclaimed and all quotes have to have 20% VAT added.

 

If your mainly dealing in logs then can claim 20% VAT back on bought in logs and only have to charge 5% on logs sold for domestic heating.

 

The OP is working as tree surgeon with the logs as a sideline so it seems to me that if most of his tree work is domestic, then he shoukdnt register for VAT unless turnover is over he threshold of £70k ish???

 

Registering for VAT allows you to reclaim your VAT on all inputs, e.g equipment, vehicles, fuel etc etc.

 

It is not necessary to add 20% VAT to quotes, it is however necessary to provide a VAT invoice once payment is recieved. This has been discussed at some length previously. It does not result in a 20% increase in cost to the customer.

 

If the OP does not wish to register his tree surgery business for VAT all he has to do is to register a company Joe Bloggs wood fuel and keep separate accounts for that company - possibly more hassle than he wants but as already stated by paying VAT on inputs he is putting himself at a considerable financial disadvantage.

 

Cheers

Mac

[slim reaper]

 

It is not necessary to add 20% VAT to quotes, it is however necessary to provide a VAT invoice once payment is recieved. This has been discussed at some length previously. It does not result in a 20% increase in cost to the customer.

 

 

 

Cheers

Mac

:confused1:

Do you have a link for that discussion?

thanks

slim

[tothby1]

think if he is a sole proprietor it is him that is vat registered for all companys. different if in partnership

[Les Arb]

As mentioned on a previous post, set up as a limited company, independently from core business. This is easily done through, for example, your accountant for 150/ 200 quid.

Register for vat. Enjoy benefits of 20% vat refund on all company purchases. Charge customer 5% . In our case making a .75 cube bag £78.75 instead of £75.00. No one will complain at an extra £3.75 on a bag. We've had about 18 months of running the business this way. Initially it was a bit intimidating with the scary vat business. It has however proved to be a good move and apart from a bit more paperwork, straightforward.

Dare I say, it can also make you look a bit more professional!

[muldonach]

:confused1:

Do you have a link for that discussion?

thanks

slim

 

http://arbtalk.co.uk/forum/business-management/66040-advice-newly-v-t-registered-company.html

 

http://arbtalk.co.uk/forum/business-management/39645-vat-not-vat-3.html

 

http://arbtalk.co.uk/forum/business-management/39319-tips-business-owners-5.html#post614535

 

http://arbtalk.co.uk/forum/firewood-forum/35474-vat-firewood-2.html

 

Happy reading

 

 

Cheers

mac

[slim reaper]

http://arbtalk.co.uk/forum/business-management/66040-advice-newly-v-t-registered-company.html

 

http://arbtalk.co.uk/forum/business-management/39645-vat-not-vat-3.html

 

http://arbtalk.co.uk/forum/business-management/39319-tips-business-owners-5.html#post614535

 

http://arbtalk.co.uk/forum/firewood-forum/35474-vat-firewood-2.html

 

Happy reading

 

Thats what I needed,

thanks

slim

 

 

Cheers

mac

 

Thats what I needed,

thanks

slim