VAT registration

[Evans Electric]

Of course you're not Sellers , you're a fine honest upstanding chap...............now ..............we need to explain a few things :innocent :innocent:C:C

 

[kerching]

I don't understand? I'm not familiar with this process?

Seriously, get a good accountant! The VAT thing is over a roling 12 month period [as I understand it], so if you exceed the treshold in any 12 month period you are liable for the VAT for all of that period, it is not april to march or whatever your accounting period is. My mate found this out to his GREAT cost; nearly had to go 'bust' over it.... :coat

 

[Andy™]

My mate found this out to his GREAT cost; nearly had to go 'bust' over it.... :coat

sounds just like something HMRC would come up with

 

[apprentice87]

Hi all,

I look at it like this;

First off, your turnover [income] is always going to be greater than your outgoings, or you will soon go bust...

You take your outgoings [allowable ones that is] from your income, and the difference is your profit, that is what you pay tax on.

Now, if all your work is for VAT registered customers, you would have to be nuts not to be VAT registered, as then, you can in turn, deduct all the VAT you have incurred on your business expenses, such as materials and fuel etc, from that, [the VAT that is] which you in turn charge, in other words, you will get the VAT you paid out, back. This means in effect I suppose, that you are adding around about 20% of the cost of all your expenses to your profit. Yeh!!!!!

If you only do work for domestic customers though, you would have to be mad to be VAT registered, because, although you can in effect "claim back" the VAT you have paid, this will obviously be less than the VAT you have charged others, [your income, hopefully, being greater than your outgoings] the difference between the two being the amount of VAT you forward to the VAT people

But you say, why should I care? the customers are the ones paying the VAT. Errrr, no, YOU are the one paying the VAT, it has to come from somewhere....

Sooooo, what do you do, you have two choices, you can charge all your domestic customers the VAT [and instantly add 20% to your prices, making you rather uncompetitive compared to none vat registered electricians] or you can "swallow" the 20% yourself and not pass the extra on to your customers.

You are now just as competitive price wise as you were before, but now your overheads have increased by 20% of your turnover....Not so good!!!!

You cannot "chop and change" either! It is the PERSON that is VAT registered, not the business

 

[philbas]

Sooooo, what do you do, you have two choices, you can charge all your domestic customers the VAT [and instantly add 20% to your prices, making you rather uncompetitive compared to none vat registered electricians] or you can "swallow" the 20% yourself and not pass the extra on to your customers..

The problem is, that for Domestic Solar PV installs the opposite is true, you will be uncompetative if you are not VAT registered.

Don't forget the parts and labour for a PV install only attract VAT at 5% (but only if you are doing the install, not just supplying the parts).

So for example:

Non VAT registered buy

 

[Apache]

73K is not that much turnover.

If half of that was materials it only leaves you

 

[batty]

I have been VAT registered for nearly ten years. I would think you would have to be part time or get customer to supply parts to not be vat registered. Not taking holidays into account 73,000 is only

 

[apprentice87]

Hi all,

Yes i agree entirely that 73K is not a vast turnover, but i bet an awful lot of "one man band" businesses never get anywhere near that amount!!..

john...

---------- Post Auto-Merged at 01:00 ---------- Previous post was made at 00:51 ----------

Hi Philbas,

Did not know that about solar installs, that complicates things just a bit!!!!

john...

 

[Technician]

A lot of very good points made here.

 

[SLIPSHOD & SLAPDASH]

But things do spring up sometimes. We got asked to see if we could better some prices for light fittings specified by an architect. Everything was listed from John Cullen, Mr Resistor etc (all very expensive top end London showrooms) We explained its all badged up stuff etc. Anyhow, the original price was

 

[batty]

Wow slips you could buy a flat round my way with that profit. (take it you mean 64k)

 

[johninlondon1]

Do not separate the business into vatable and non vatable as they will come back looking for you and ask for the VAT on the non chargeable VAT to your Domestic Customers. This has some info on it.

HM Revenue & Customs: When to register for UK VAT

I am a bookkeeper (20 years), Plasterer (6 Years) and now in second year of Sparky training.