VAT Registration

[Inoff the Red]

My accountant reckons the flat rate scheme saves me around £800 per year, but the big plus in my book is that paying a % of turnover is simple and you can't really get it wrong, so you won't get a VAT inspection and find you owe them money.

 

 

That's interesting, I wonder if others on here that are not on the flat rate scheme would benefit from switching.

 

We routinely check to see whether clients would be better on a flat rate scheme but invariably find that they wouldn't be. One reason could be the nature of capital additions. Under the flat rate scheme Capex in excess of £2,000 (i.e. the invoice from a single supplier is for £2k+) can be treated outside the flat rate scheme and the vat reclaimed. If capital expenditure tends to relate to low value items or is purchased from multiple suppliers, then the vat is effectively lost. So if a business buys big pieces of kit the flat rate scheme may be worth doing.

 

The forestry scheme rate of 10.5% may appear to be generous but in calculating the vat payable to HMRC it is applied to the VAT inclusive total of sales. So for total sales of £120,000 (£100,000 +£20,000 vat) the vat payable is £12,600 (being £120,000 x 10.5%) so it is an effective rate of 12.6%. whether this is low enough to result in a saving to a business will depend on its cost and overhead structure and capex profile.

[HertsWood]

We've been VAT registered since we started in 2006 (same time we incorporated), most of our customers are commercial and demand both VAT registration & ltd status. It helps as you can claim VAT back on most things, from fuel to the coffee bought at Starbucks..

 

 

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[mattplace]

Under the flat rate scheme Capex in excess of £2,000 (i.e. the invoice from a single supplier is for £2k+) can be treated outside the flat rate scheme and the vat reclaimed.

 

It's £2000 INCLUDING vat. This is from hmrc:

 

15.2 Reclaim of VAT on capital expenditure goods

If you use the flat rate scheme, you can reclaim the VAT you have been charged on a single purchase of capital expenditure goods where the amount of the purchase, including VAT, is £2,000 or more.

[Brett]

And what if you can't find clients like that? People don't necessarily want a cheap job they just want a fair price and if as in my case only 2 out of 6 or 7 competitors are vat reg it makes things hard. I looked into as I kept hitting the limit and when I worked out what I could claim back each month it was in reality very little, unless your hired in labour is vat reg. Monthly fuel bill didn't generate much and unless you but new machines then you don't get much back.

 

 

Hodge

 

As far as I know we are the only guys in our immediate area who are vat. even if we are more expensive than every other tender we are still offering a fair price. we offer a fair price for the service that we offer. in order to offer the level of service we do, we have no choice but to be vat, the numbers dont add up for me otherwise. I know its not for everyone. for us, we are better off being vat.

[Alycidon]

Dont forget that when vat registered you have to submit your returns electronically and pay electronically. A simple accounts package from sage or similar is a great help.

 

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