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Topic Title: VAT REGISTERED
Topic Summary: Are You ?
Created On: 30 January 2013 08:38 PM
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 30 January 2013 08:38 PM
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Ampman

Posts: 962
Joined: 06 February 2006

Evening ,

Who on the forum is vat registered ?

Is it advantages towards business ?

Do you lose work because it pushes price up ?

Would you register a new business vat from the start up or wait till you hopefully hit the thresholds ?

cheers
 30 January 2013 08:44 PM
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Richard64

Posts: 231
Joined: 15 October 2009

I went VAT registered straight away.
At 20% on materials, tools and diesel, it seemed like a good idea.
And if you don't spend much, you can go flat rate at 9%.
It's not too difficult to keep on top of.
 30 January 2013 08:54 PM
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Ampman

Posts: 962
Joined: 06 February 2006

how the flat rate vat work ?
 30 January 2013 08:59 PM
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DOUGIE1000

Posts: 4113
Joined: 13 August 2005

I got two businesses the electrical business is vat registered due to exceeded turnover, the non electrical business flies at the vat threshold each month period.

Personally I prefer the vat registared company

-------------------------
Dougie
Power Plus Electrical.co.uk

My mission is to live as long as possible......so far so good!
 30 January 2013 09:01 PM
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daveparry1

Posts: 5883
Joined: 04 July 2007

I was vat registered when it all began in the seventies but came out of it a few years later, just wasn't worth the bother as I was under the threshold. When vat was first introduced the lower limit was £5k turnover!

Dave.
 30 January 2013 09:12 PM
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sparkiemike

Posts: 1512
Joined: 24 January 2008

If you are not VAT registered your hourly/daily rate should be higher. This is so you can recover the higher cost of your overheads/expenses, because you can't claim back the VAT on those overheads - well that is what my accountant says.
 30 January 2013 09:29 PM
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impvan

Posts: 705
Joined: 07 September 2005

I'm VAT registered, and nowhere near the threshold. This triggered some pertinent questions from HMCE (as was) when i applied.

90-odd percent of my work is for businesses, and not being registered was making me uncompetitive.
I also find it adds an air of legitimacy when you go to open trade accounts.
I was able to claim back the VAT i had paid on tools & equipment for the three years prior to registration which was a nice bonus.

Tracking VAT is as easy as doing your normal books; you don't need an expensive software package, there's plenty of freeware out there to do it, or a simple spreadsheet will cope ~ after all it's only arithmetic. These days you MUST file electronically - no paper returns, but you do get an additional week to pay.
 30 January 2013 09:32 PM
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Ampman

Posts: 962
Joined: 06 February 2006

impvan , do you use a software package ? for accounts
 30 January 2013 09:49 PM
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impvan

Posts: 705
Joined: 07 September 2005

Yes, I use Quickbooks for all the daily stuff.
I track my assets and depreciations (a relic from before the 50k Capital Allowances claim-it-all-in-the-first-year rule) in a spreadsheet (still on Lotus 1-2-3 IIRC)

I bought an OEM version of QB which was a previous year's version and hence cheap. I'm still using it 11 years later. They're pushing hard the online version these days, nice monthly fee for them, but you can still buy outright. If you intend to use the Payroll functions for employees then you MUST use <3 year old versions to get the relevant tax tables.

I thought QB was a lot more 'human' in the way it worked, where the others available at the time - sage, MYOB, peachtree - all talked of journals and reconcilliation and double-entry, which scared the sh1t outa me. At least in QB when you write a cheque, you get a picture of a cheque and the fields to fill in!
I wanted to do all my own books, but don't want to turn into an accountant - shiny trousers don't look good on me.

That said, QB has an appalling reputation for customer support (in the UK you even had to pay for access to the FAQ's, canada & usa & australia users got that free) but then it's unlikely you'll need it...
If starting with QB again i'd pay an accountant who's used to QB to do the initial setup.

My biggest bugbear is that as a non-Windows user there's very little effective accounts software available, and i have to keep a windoze partition going just to run the accounts.
 30 January 2013 09:55 PM
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Richard64

Posts: 231
Joined: 15 October 2009

I use a package called Solar Accounts. It was in the region of 120, but is easy to use. And you get to issue a nice looking invoice.
It also takes care of your CIS deductions.
And it's VAT deductable :-)
And as has been stated, if you're working for businesses, being VAT registered looks better. Even when working for the public, it adds an air of legitimacy.
And if your outgoings aren't excessive look at the flat rate scheme. Your accountant should advise you on the best course.
 30 January 2013 10:06 PM
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BrucieBonus

Posts: 621
Joined: 20 February 2007

No I'm not as 99.9% of my customers are domestic and I don't want to be 20% more expensive than I already am!
 30 January 2013 10:46 PM
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Martynduerden

Posts: 3211
Joined: 13 July 2008

Originally posted by: BrucieBonus

No I'm not as 99.9% of my customers are domestic and I don't want to be 20% more expensive than I already am!



This is not normally true, your charges need not normally rise if your vat registered, unless you want to of corse.

Vat is mainly a percieved / physiological issue rather than an actual increased cost.

Take vans for example, a van which is not subject to vat is £15,000 where as a vat qualifying van is 12,500 plus vat.

In terms of running an electrical / trade business I find it odd when companies are not registered for vat, everything we buy is plus vat, goods, services, fuel, schemes, training etc etc.

If you are not registered then vat is included in what you charge the customer.

You might say that there is no vat on your labour, but there is its just hidden, your labour is partly made up of what it costs you to stay afloat.

My charges are plus vat as I am we'll over the threashold currently 73k, when I first registered it was c38k.

I registered as it was not optional both in terms of turnover and winning jobs commercial clients want their vat back!

-------------------------
Regards

Martyn.

Only a mediocre person is always at their best



www.electrical contractors uk.com
 01 February 2013 06:10 PM
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welchyboy

Posts: 44
Joined: 08 September 2011

I only registered in August this year after spending the previous couple of years desperately trying to stay under the limit through fear I would loose a lot of my domestic business

To be honest I really prefer it, and think it gives a more professional look, I wish I'd done it years ago!

I haven't had much trouble with people paying it really, although it has got rid of a few undesirable customers I am probably better off without
 01 February 2013 06:46 PM
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BrucieBonus

Posts: 621
Joined: 20 February 2007

Hmmmm, Martyn can you explain for me please about the VAT?

The way I see it (which might be wrong of course) is that

I do a days work at say £300 labour and £50 materials. If I am not VAT registered then I charge customer £350 of which £10 is VAT that I can't claim back

If I am VAT registered the next day I charge the customer £410 and can claim back £10 of VAT. The customer can't claim anything back as they are not VAT registered. What the customer sees is that I am £60 more expensive than the day before.... And I gain £10 - but for this have to do VAT returns every quarter.

Or am I missing something??

Welchyboy - I'd be interested to know if the change has meant you have lost domestic customers?
 01 February 2013 07:05 PM
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welchyboy

Posts: 44
Joined: 08 September 2011

Brucie - thesewere my exact concerns too, your more or less right in what your saying, but youve got to remember that as soon as you register your running costs drop by 20% fuel tools etc

i do around 60% domestic work and to be honest on the bigger jobs it is a big lump on top sometimes eg re-wire or labour intensive jobs
but alot of my jobs are from recommendation or repeat customers and that tends to help a lot, as they are not so focused on the bottom line

for my commercial jobs its great and if anything, gets me alot more work, and as this is the area i want to end up in mostly

you have to stay on top of the paperwork though, but my missus just inputs it once a week on a spread sheet for an hour or so

the bottom line is if you want to grow or expand past a one man band then its a must
 01 February 2013 07:12 PM
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BrucieBonus

Posts: 621
Joined: 20 February 2007

Hey - thanks for the quick reply Welchyboy! Very helpful.

I don't do any commercial jobs any more (terrible payers!) and I'm not really interested in them (although that might change I guess who know what's around the corner!) My fuel costs are minimum as I rarely work more than a mile or two from home. I'm also quite content to be a one woman band at the moment, so that's not a bother. My husband has his own VAT paperwork to do, so can't see him volunteering to take on mine too! It's great that your other half can help out!

So I think I've answered my own question, with your help, I'll stay as I am for the moment!
 01 February 2013 07:39 PM
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DOUGIE1000

Posts: 4113
Joined: 13 August 2005

I prefer to be vat registered if I'm honest, I have lost some tight customers but to be honest as Welsh said, good customers not give a notice.

Most people don't realise that there are smaller companies don't charge vat, most of my customers are vat registered companies anyway.

I feel every uk company should be vat registered from day one. Everyone 20% vat

-------------------------
Dougie
Power Plus Electrical.co.uk

My mission is to live as long as possible......so far so good!
 01 February 2013 08:33 PM
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dg66

Posts: 1649
Joined: 11 January 2008

The main point i found when i was VAT registered many moons ago was that i was often offered cash in hand for a 17.5% discount. Of course i always declined.

-------------------------
Regards

Dave(not Cockburn)
 01 February 2013 09:22 PM
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sparkingchip

Posts: 5695
Joined: 18 January 2003

In a former life as a carpentry contractor some twenty years ago I signed a contract for the labour only carpentry contract on seventy three new houses, I then presented myself at the then local VAT office showed them the contract and they proceeded to register me for VAT as I would then going to exceed the turnover limit.

All the work was zero rated and I never collected any VAT at all for several years, however as noted above on my first return I claimed back VAT paid "whilst setting up the business" so I was repaid money on my van, tools including a generator etc. etc. it really improved my finances over the period I was registered.

I then got a job as a Site agent for a national house builder for a year and gave up my registration as I was a employee, when I became sel employed again I didn't register for VAT again as I was below the threshold, however I have never been convinced it was to my advantage to not be registered as also noted above there is so much VAT paid anyway and I have to cover this in my labour and material rates anyway. To be honest most of my clients would be better off if I was VAT registered as they can claim it back anyway.

To start to put things in perspective consider this, last week I took delivery of a shiny new Nissan NV200 van, I haven't paid for it in full and Nissan lent me the balance which includes the VAT. So not only am I paying the VAT on the van, I am also paying interest on the VAT, so even if I register for VAT now and claim back the VAT I would still lose out on the interest already to date, therefore if i could register for VAT immediately I would be at least two grand better off.

Andy
 01 February 2013 09:43 PM
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perspicacious

Posts: 7031
Joined: 18 April 2006

"In a former life as a carpentry contractor some twenty years ago I signed a contract for the labour only carpentry contract on seventy three new houses,"

And I know of electrical contractors from the same era being picked up by the nice VAT people for not charging VAT on new build as the supply included the obligatory 5' in the kitchen and a shaverpoint with a 60 W lamp. They had to charge VAT on the two lamps, not the fittings

Regards

BOD
IET » Wiring and the regulations » VAT REGISTERED

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