Mainly domestic; are you VAT registered?

[Welchyboy]

hey

Im at the point where im struggling to stay under the VAT limit and im thinking of buying a new van in the next few months so i will need to shortly register for VAT, has any of you lads who do a fair bit of domestic work had problems with the extra hassle or cost to the customer? or has it worked out better for you!
I have tried to avoid it up to now cause all i get on nearly every job is the old 'can you do it cheaper for cash mate'
Although I would think commercial customers would be no problem

Anyone?

 

[Octopus]

Wish I had your "problem"

 

[RWJ]

We work for a local taxi / mini bus company that has "multiple" companies, and each one manages to stay under the VAT threshold.

ABC Mini Buses Ltd
ABC Taxies Ltd
ABC Mini Cabs Ltd
BC Taxies Ltd
etc
(ABC is JUST an example, I HAVE changed the name.)
I think they up to about 5 or 6 companies... You never know which on to charge the job to!

I'm not suggesting they do this to avoid VAT ;-) or that you should as I'm not sure of the legality.

 

[IQ Electrical]

We work for a local taxi / mini bus company that has "multiple" companies, and each one manages to stay under the VAT threshold.

ABC Mini Buses Ltd
ABC Taxies Ltd
ABC Mini Cabs Ltd
BC Taxies Ltd
etc
(ABC is JUST an example, I HAVE changed the name.)
I think they up to about 5 or 6 companies... You never know which on to charge the job to!

I'm not suggesting they do this to avoid VAT ;-) or that you should as I'm not sure of the legality.

The legality is you can't do that as a sole trader as it's YOU that's registered rather than a company.

VAT ruins our domestic pricing but that's not always a bad thing, it seems to leave us with a better class of customer (I know that sounds awful).

 

[Welchyboy]

Yeah thats what im hoping i dont become 'uncompetitive' and the paper work is a bit of a pain apparently

 

[liam b]

im doing my best not to register, to the customer your just that bit more expensive than the other guy.

 

[LukeD]

No way in hell would i ever want to be VAT registered . too much grief, my clients would hate me .



No !

 

[byrnie_2004]

how easy is it to un-register? say if you register and realise its costing you work

 

[BillyTheSparks]

how easy is it to un-register? say if you register and realise its costing you work

I was speaking to a builder the other week about this, and he was saying that if you were to be VAT registered, then decide not to. HMRC or whoever it is can reclaim the VAT that hasn't been paid to them etc.

Not sure if this is entirely right, but I'm sure someone on here will put me straight.

 

[IQ Electrical]

Absolutely right, think about it, you owe them it unless you've paid more VAT out!

 

[IQ Electrical]

I think there's a lack of understanding on the VAT front here, have a read of this HM Revenue & Customs: When to register for UK VAT

All questions raised in this thread are answered.

 

[Ponty Massive]

It's not such a bad thing. If your not VAT registered, then you still have to pay for your materials gross and pass that cost onto your customer. When your VAT registered, your price increase will only be 20% extra on your labour rate but you get the advantage of claiming back the VAT on materials, fuel, van etc.

e.g if your not VAT registered:

Materials £100 + VAT = £120 (what you pay at the wholesalers)
Labour £100 = £100

Total for job = £220



VAT registered

Materials = £100
Labour = £100
(VAT) = £40
Total for job = £240

Also claim back 20% on all your fuel, vehicles, tools, clothes, anything to do with the business. You may loose the odd job, but you may end up with more money in your pocket? Best thing is to work out your outgoings and incomings and see what's best for your situation.

 

[Welchyboy]

To be honest ponty the more i think about it the more i think i will get registered, its not as bad when you think of the benefits as well and as was mentioned here before it will maybe get rid of some of the customers that you can maybe do without, also when i do them little odd jobs on the way home for £30 hopefully they wont be so quick to go for the chequebook when i tell them it will then be + vat
the builders i work for are vat any way, does that mean they wont have to stop my CIS tax then cause that it a pain in the --- too

 

[IQ Electrical]

To be honest ponty the more i think about it the more i think i will get registered, its not as bad when you think of the benefits as well and as was mentioned here before it will maybe get rid of some of the customers that you can maybe do without, also when i do them little odd jobs on the way home for £30 hopefully they wont be so quick to go for the chequebook when i tell them it will then be + vat
the builders i work for are vat any way, does that mean they wont have to stop my CIS tax then cause that it a pain in the --- too

No, your CIS will not change.

 

[byrnie_2004]

It's not such a bad thing. If your not VAT registered, then you still have to pay for your materials gross and pass that cost onto your customer. When your VAT registered, your price increase will only be 20% extra on your labour rate but you get the advantage of claiming back the VAT on materials, fuel, van etc.

e.g if your not VAT registered:

Materials £100 + VAT = £120 (what you pay at the wholesalers)
Labour £100 = £100

Total for job = £220



VAT registered

Materials = £100
Labour = £100
(VAT) = £40
Total for job = £240

Also claim back 20% on all your fuel, vehicles, tools, clothes, anything to do with the business. You may loose the odd job, but you may end up with more money in your pocket? Best thing is to work out your outgoings and incomings and see what's best for your situation.

Am I right in thinking when you do your VAT return, this then offsets against your Tax return?
e.g. simplified if you owe £3000 tax and your claiming £1000 back VAT then you really owe £2000???