Are you VAT registered

[KungFuTurkeyLeg]

Hi all,

I'm currently VAT registered with 16 people on board and trying to decided whether to set up a separate entity that is not VAT registered to pick up smaller domestic work to fill the gaps between our normal bread and butter work. Extras as such for the lads to earn some extra money between projects. Along the lines of additional sockets, light fitting changes, EICR's, etc.

Just curious to know who has and hasn't gone VAT registered?

Are you a 1 man band, a 1 man band and an apprentice, or someone with several people working for you?

Has being VAT registered lost you an unreasonable amount of domestic work or does it often price you out of the job?

 

[Teddy Lop]

Id check the rules very carefully, the vat man may view such a move as evasion.

How would you stay below the threshold? I can't and there's pretty much just me. The only way I could see it working is two guys in loose partnership running their own separate vat/no vat co's, able to make sure the one stays below the limit by bouncing work across, paying each other in kind and leaving nothing at all for prying eyes to find...

 

[littlespark]

You’re going to have to educate me here…. You’ve got 16 staff, but you are a trainee yourself?


As above, messing around would be seen as tax evasion… and more work for your account dept.
You might price yourself out of some smaller jobs… but every other company has to do the same. Apart from the one man bands

Still a level playing field when it comes to pricing.

 

[KungFuTurkeyLeg]

Spent

You’re going to have to educate me here…. You’ve got 16 staff, but you are a trainee yourself?


As above, messing around would be seen as tax evasion… and more work for your account dept.
You might price yourself out of some smaller jobs… but every other company has to do the same. Apart from the one man bands

Still a level playing field when it comes to pricing.

Long story short, I spent about 10 years as a spark after leaving school. I just got 16th edition, COMPEX, pat and a few other quals from the employer at the time. Then I switched into doing fibre build for the last 10 years. As fibre is slowing down over the next 2-3 years, I'm bringing myself back up to date to move back into electrical. Most of my fibre work has to follow the 18th edition on our internal work. Bit rusty on some parts but currently putting myself through level 2, 3, NVQ and AM2E.

 

[KungFuTurkeyLeg]

Id check the rules very carefully, the vat man may view such a move as evasion.

How would you stay below the threshold? I can't and there's pretty much just me. The only way I could see it working is two guys in loose partnership running their own separate vat/no vat co's, able to make sure the one stays below the limit by bouncing work across, paying each other in kind and leaving nothing at all for prying eyes to find...

I'm not looking to avoid the tax, I currently keep Rishi in new underpants and socks to the tune of about £180k a year in taxes. It's more of a company focused on a domestic market than my commercial side, and being able to offer a sensible price to the average house.

 

[LukeD]

you need professional advice .

 

[KungFuTurkeyLeg]

you need professional advice .

My accountant will deal with the taxes etc.

My ask here is has being VAT or not VAT registered impacted your ability to get work in the domestic setting. Has the additional 20% VAT priced you out of a reasonable chunk of work?

 

[SJD]

Being VAT registered will obviously mean you are more expensive, by the VAT on the labour element of the work. The point is that HMRC specifically warn against splitting work of a similar nature into multiple businesses to avoid having to register one or more of them for VAT.

If you are already running a business doing electrical work, I suspect you would be flagged up for tax evasion, irrespective of whether you separate the domestic & commercial work. Even more so if you have the same guys working for both businesses.

To answer your question, yes it can help to not be VAT registered, to be more competitive. On the other hand, if you are in the position of having too much work and having to turn jobs down, it is perhaps not going to matter.

 

[LukeD]

I am NOT VAT registered and make sure I dont ever have to be .Even if it means a bit of minor trickery some years . I get around it by asking the client to Spilt a invoice over into the next year etc and then adjust that years income .Once you are registered , they never believe it if you want to opt out ! For most domestic work , its fine to be VAT registered if you are dealing with rich people most of the time. Big issue is when a client has legal finance issues and wants to hide "spending money" !! Thats a pain in da bum .

 

[KungFuTurkeyLeg]

I am NOT VAT registered and make sure I dont ever have to be .Even if it means a bit of minor trickery some years . I get around it by asking the client to Spilt a invoice over into the next year etc and then adjust that years income .Once you are registered , they never believe it if you want to opt out ! For most domestic work , its fine to be VAT registered if you are dealing with rich people most of the time. Big issue is when a client has legal finance issues and wants to hide "spending money" !! Thats a pain in da bum .

Is that just to avoid additional accounting or to better price jobs?

 

[KungFuTurkeyLeg]

Being VAT registered will obviously mean you are more expensive, by the VAT on the labour element of the work. The point is that HMRC specifically warn against splitting work of a similar nature into multiple businesses to avoid having to register one or more of them for VAT.

If you are already running a business doing electrical work, I suspect you would be flagged up for tax evasion, irrespective of whether you separate the domestic & commercial work. Even more so if you have the same guys working for both businesses.

To answer your question, yes it can help to not be VAT registered, to be more competitive. On the other hand, if you are in the position of having too much work and having to turn jobs down, it is perhaps not going to matter.

Thanks for that, I would consult my accountant before creating another business to make sure I stay the correct side of the tax man.

 

[KungFuTurkeyLeg]

Thanks for the responses. It was seeing one of Nick Bundy's videos yesterday that sparked the question. Now he has gone sole trader with no apprentice etc, he has unregistered for VAT.

 

[LukeD]

Is that just to avoid additional accounting or to better price jobs?

to ensure I dont step over the threshold . .Ive even taken a holiday for a month rather than earn more and cross over !

 

[Dan]

Hi all,

I'm currently VAT registered with 16 people on board and trying to decided whether to set up a separate entity that is not VAT registered to pick up smaller domestic work to fill the gaps between our normal bread and butter work. Extras as such for the lads to earn some extra money between projects. Along the lines of additional sockets, light fitting changes, EICR's, etc.

Just curious to know who has and hasn't gone VAT registered?

Are you a 1 man band, a 1 man band and an apprentice, or someone with several people working for you?

Has being VAT registered lost you an unreasonable amount of domestic work or does it often price you out of the job?

Added a poll to the thread for you mate. Let me know if you want me to make your signature link to it.

 

[baldelectrician]

We (my son and me) are not VAT registered

We keep turnover lower by getting the client to buy dear stuff

We fitted 6 Aico smoke alarms (most battery, radio link at £60 a pop) yesterday.
When I quoted the job I explained to the client we will give them a list of smoke alarms they need and the number of 2 wholesalers locally.
They buy them on their card against the wholesaler cash account (not my wholesaler account) and we fit them

Yesterday on that job alone I reduced my turnover by £400, we were there 2.5 hours.

I also have clients with larger VAT registered firms and encourage them to either set up their own account with the wholesaler or pick up the stuff and they pay debit card. Then we charge labour plus limited materials.

 

[UNG]

You have the potential to cause yourself a whole load of pain with what you are proposing especially if the companies inter trade labour
I had 2 VAT registered companies running 20 - 25 years ago one traded as an electrical contractor the other was mainly involved in the installation of wireless networks on masts and buildings and because of the nature of the work it involved rope and mast access which opened up opportunities to do electrical work that was only accessible by ropes, this company did work accross Europe and a little bit further afield which quite often created some interesting VAT issues add into this the permanantly employed labour of both companies would often work for either company to cope with the peaks and troughs it did prompt an awkward indepth VAT inspection to check we were not avoiding paying VAT
I would imagine having a company registered for VAT and one not doing exactly the same work would raise some eyebrows when we explained our reasons for having 2 companies which was mainly down to the cost of the working at height insurances some of which were based on turnover following the investigation they were happy with our reasons and we we were left alone