Vat killing me!

[GardenKit]

When I first started out on my own in 2003 I asked advice from my then accountant, who suggested two businesses, one non VAT sole trader for service, and another, Ltd, VAT reg business for sales.

 

Within 18 months I had a visit from the VAT man (actually a lady) who was not impressed. But she was helpful and fair.

 

The result was the integration into one VAT reg company and a change of accountant.

[richy_B]

It's called VAT seperation and is illegal if you are dividing a business supplying the same product or service under different names primarily for the purpose of avoiding VAT. Happens in most trades I expect though but very easy for them to see, trace and fine/prosecute for.

 

Perfectly legal if you deliver different services but if it's all arboriculture, delivered by the same workers, using the same equipment, wearing the same gear, etc, etc you are 100% illegal. If you use yourself and you tipper for waste disposal you could call it a different business, if you used your tractor for contract meadow work and so on.

 

You have to accept VAT is part of business growth. Everyone bar one man bands will hit the threshold in a year. It's only £332 turnover a day based 250 days a year.

Edited April 12, 2016 by richy_B

[hamdogg]

Interesting thread, ive always been put off going vat registered because I win so much domestic work because I'm not! A lot of big companies around me are VAT registered and when I price against them, I usually win the work!!

[Marc Lewis]

It's called VAT seperation and is illegal if you are dividing a business supplying the same product or service under different names primarily for the purpose of avoiding VAT. Happens in most trades I expect though but very easy for them to see, trace and fine/prosecute for.

 

Perfectly legal if you deliver different services but if it's all arboriculture, delivered by the same workers, using the same equipment, wearing the same gear, etc, etc you are 100% illegal. If you use yourself and you tipper for waste disposal you could call it a different business, if you used your tractor for contract meadow work and so on.

 

You have to accept VAT is part of business growth. Everyone bar one man bands will hit the threshold in a year. It's only £332 turnover a day based 250 days a year.

 

I would have thought more companys would be vat registered because like you say richy, the threshold is relatively low.

[harrythecat178]

Have you looked at the flat rate vat schemes where you pay a flat rate on your turnover? See if you would be better off. The vat deduction would count against your tax return

[richy_B]

I suppose everyones different but I registered very early on because it made sense for equipment purchases, leases, fuel costs, etc.

 

I also feel VAT registration gives customers more confidence in you as they can look you up on a govt system. Compared to the guys who just supply a mobile number only you are leaps and bounds ahead. For me displaying LTD business name, registration, address, phone and VAT number alleviates concerns of you being some cowboy, flytip it in an alley outfit.

[hamdogg]

I suppose everyones different but I registered very early on because it made sense for equipment purchases, leases, fuel costs, etc.

 

I also feel VAT registration gives customers more confidence in you as they can look you up on a govt system. Compared to the guys who just supply a mobile number only you are leaps and bounds ahead. For me displaying LTD business name, registration, address, phone and VAT number alleviates concerns of you being some cowboy, flytip it in an alley outfit.

 

 

I see what you mean, but a lot of good sole traders out there, just running a small firm!!

[hamdogg]

i would have thought more companys would be vat registered because like you say richy, the threshold is relatively low.

 

 

💷💷💷💷💷💷😂😂😂

[richy_B]

True but even a small firm will hit the threshold in no time. £83k turnover really isn't much. I would have thought a two man team would be charging atleast £450 a day anywhere in the country.

 

Unless it's all cash of course, which if that your route then I doubt VAT separation is going to be a concern of yours!

[Billy]

You can't have two companies doing similar or in this case identical businesses and one not be VAT registered. You could only do this if you for example had a tree surgery contracting company and a green grocers shop or similar very distant businesses, that's what my account told me and anyway and makes perfect sense imo.

I went Got into VAT a few years ago and profits And turnover has continued to steadily rise since, profit more so infact. Dealing with domestic customers and VAT can be tricky if they're a bit tight but you just have to word things right I.e customer-"does that include VAT" you " That is the total price" there's no need to directly mention VAT answering that question, then they won't get a bee in their bonnet.