IET logo
 
IET
Decrease font size
Increase font size
Topic Title: VAT at 20%
Topic Summary: Even more reason not to work too hard.
Created On: 22 June 2010 06:10 PM
Status: Post and Reply
Linear : Threading : Single : Branch
Search Topic Search Topic
Topic Tools Topic Tools
View similar topics View similar topics
View topic in raw text format. Print this topic.
 22 June 2010 06:10 PM
User is offline View Users Profile Print this message


Avatar for 1652.
1652

Posts: 348
Joined: 22 March 2007

With VAT going to 20% I am glad that I am keeping under the VAT threashold.

More work for the smaller guy less for the big guys as we can under cut them by 20% on the Labour costs.
 22 June 2010 07:34 PM
User is offline View Users Profile Print this message


Avatar for noshocks.
noshocks

Posts: 14
Joined: 14 September 2009

Really, that MK consumer unit you bought cost me 20% less than you, my diesel is 20% less than you pay, and the DIY materials you may buy for those weekend jobs or that extension your building to your house is costing you an extra £1000 than I will pay.

I am a sole employee NICEIC approved contractor, I put across a profesional image of a larger company and customers expect to pay VAT, although I actually turnover just under the threshold, its a matter of choice, for me its been better to be VAT registered and will remain so.
 22 June 2010 07:55 PM
User is offline View Users Profile Print this message


Avatar for slittle.
slittle

Posts: 3582
Joined: 22 November 2007

Noshocks,

I agree, although we would have to downsize considerably these days to get under the theshold, I'm quite happy being an unpaid revenue collector for hmrc.
If only for that fact that quite a few of our customers refuse to deal with businesses that are not registered for vat.

As far as I see it, the only difference the 20% will make is the amount in the bank at the end of the quarter before we send them their money. We are pretty lucky to be fair that we tend to only deal with vat registered businesses so as far as they are concerned it makes no difference other than a bit of an increase in cashflow demands.

Stu
 22 June 2010 08:11 PM
User is offline View Users Profile Print this message


Avatar for sparkiemike.
sparkiemike

Posts: 1552
Joined: 24 January 2008

I think it depends who your customer base is. If it domestic and most of these customers will not be VAT registered so will not be claiming the VAT back, so it stands to reason that your labour costs will be 20% cheaper. And as for
DIY materials you may buy for those weekend jobs or that extension your building to your house is costing you an extra £1000 than I will pay."
that is fraud.
 22 June 2010 08:51 PM
User is offline View Users Profile Print this message


Avatar for noshocks.
noshocks

Posts: 14
Joined: 14 September 2009

'that is fraud'

No that is creative accounting, its building materials, the same as used to make good on any rewire, a plasma TV, water bed or foreign holiday is called 'trying it on' as my accountant says.

I can see that you are not VAT registetered then, speak to your MP about what you can and cannot claim, wake up and smell the coffee.
 22 June 2010 09:58 PM
User is offline View Users Profile Print this message



normcall

Posts: 8162
Joined: 15 January 2005

They do say that MP's and accountancy firms are the worst and, I know you won't believe this, but the reason the county is in the state it is, is down to the incompetence of these two groups of people.
It's a long while since I joined the happy band of unpaid tx collectors when it started in the early 1970's, but it's been a fair few years since extensions and maintenance were able to be claimed back. Of course, that was in the days when the Inland Revenue and Customs & Excise didn't talk to each other - they do now.

PS Ahh the days of 22.5% VAT or the mixture of 8 and 12.5% and calculators where a twinkle in Mr Sinclairs' mind.

-------------------------
Norman
 22 June 2010 10:22 PM
User is offline View Users Profile Print this message



daveparry1

Posts: 6325
Joined: 04 July 2007

I know you won't believe this
------------------
Oh yes we do Norm!
 22 June 2010 10:32 PM
User is offline View Users Profile Print this message


Avatar for 1652.
1652

Posts: 348
Joined: 22 March 2007

As a spark what does a 3 bed rewire cost. £300 parts £1400 Labour....Vat return on parts is not a lot however the cost of adding VAT on to Labour is a lot..

Vat reg is paper work and a tax on companies.

As for looking BIGGER to your customers.......more expensive quote that is not going to win jobs.

Jobs are won by word of mouth customers recommending you, I get more jobs from customer satistaction than any other route who prefer the local man whom will not crap on his own doorstep. Advertising cost nil.

Word of mouth means more than being VAT reg........FFS
 22 June 2010 10:37 PM
User is offline View Users Profile Print this message


Avatar for 1652.
1652

Posts: 348
Joined: 22 March 2007

Originally posted by: noshocks

although I actually turnover just under the threshold, its a matter of choice, for me its been better to be VAT registered and will remain so.



You are over charging your customers. Take a break like 6 weeks fly to the other side of the planet and enjoy life a bit more during the Winter.

You will save a weeks work doing the VAT paper work lol.
 22 June 2010 10:39 PM
User is offline View Users Profile Print this message


Avatar for 1652.
1652

Posts: 348
Joined: 22 March 2007

Originally posted by: noshocks
customers expect to pay VAT.


I never knew Gordon Brown had become a sparky........ Robbing git.
 22 June 2010 10:40 PM
User is offline View Users Profile Print this message


Avatar for sparkiemike.
sparkiemike

Posts: 1552
Joined: 24 January 2008

Originally posted by: noshocks

'that is fraud'

No that is creative accounting, its building materials, the same as used to make good on any rewire, a plasma TV, water bed or foreign holiday is called 'trying it on' as my accountant says.

I can see that you are not VAT registetered then, speak to your MP about what you can and cannot claim, wake up and smell the coffee.


spare the insults, have you ever had a VAT inspection then?
 23 June 2010 06:47 AM
User is offline View Users Profile Print this message



normcall

Posts: 8162
Joined: 15 January 2005

The advantage used to be that labour was cheap and materials expensive, so it was worth registering, now it's the other way round.
Material cost to rewire/wire the average home is about the same as it was when I started, and that wasn't last year. Labour costs have gone up at least 15 times.

This is the reason I de-registered some time ago.

In one of my other lives, I deal with large companies and they sometimes query if VAT is included or not. I gently ask if they can see a VAT reg number, but it wouldn't surprise me is some of them assume it's VAT inclusive - you just can't get the staff now!

-------------------------
Norman
 23 June 2010 06:58 AM
User is offline View Users Profile Print this message


Avatar for ebee.
ebee

Posts: 5776
Joined: 02 December 2004

If you're above the threshold then you gotta register and charge VAT.
If below then you can choose yerself.

If you have a choice then the next question is are more of your customers Vat reg businesses or are they domestic because if you are Vat registered it will cost your domestic customers more but business customers less (Some Vat reg customers might not like to deal with you if they can't claim back some Vat on your invoice).

It depends upon your spread of clients really.

Some businesses (incuding electrical contractors) actually run two seperate businesses one Vat reg and one not to get a better benefit from this situation - one of them being the "holding company" so to speak


Before anyone starts on about the EU, prior to VAT there was purchase tax , ask Norman!

-------------------------
Regards,
Ebee (M I S P N)

Knotted cables cause Lumpy Lektrik
 23 June 2010 07:10 AM
User is offline View Users Profile Print this message



normcall

Posts: 8162
Joined: 15 January 2005

Only on 'luxury' goods - like irons!

-------------------------
Norman
 23 June 2010 07:11 AM
User is offline View Users Profile Print this message


Avatar for ebee.
ebee

Posts: 5776
Joined: 02 December 2004



-------------------------
Regards,
Ebee (M I S P N)

Knotted cables cause Lumpy Lektrik
 23 June 2010 08:48 AM
User is offline View Users Profile Print this message



betnwah

Posts: 236
Joined: 16 September 2009

PT on ladders if you were a homeowner but not if you were a tradesman.
 23 June 2010 11:10 AM
User is offline View Users Profile Print this message


Avatar for gkenyon.
gkenyon

Posts: 4480
Joined: 06 May 2002

Originally posted by: noshocks

Really, that MK consumer unit you bought cost me 20% less than you, my diesel is 20% less than you pay


None of this is true:

1. It's not costing you 20% less, it's only "costing you" 16.7% less. For example, if the price is £100 ex-VAT, then the price is £120 inc VAT, and you pay £20 less if claiming the VAT back. Therefore as a percentage, it's 100*£20/£120 = 16.7%


2. The customer has to pay the VAT anyway, and it's the cost to the customer that counts.

So, for arguments sake, you want to make £30 on your £100 ex-VAT item, you charge £130, but you've got to add VAT

So, your customer pays £130*120/100 = £156.


Compare your non-VAT-registered colleagues.

They pay £120 for the £100 item, but to make £30 can charge only £150.

You're £6 more expensive for the same actual mark-up !!!

In addition, your percentage profit of selling price is only 19.2%, whereas your non-registered colleague is getting 20% !!!


Plus you've got more paperwork and sums to do, and maybe a larger accountant's bill because they're looking over the VAT returns as well as the tax returns.

You might just need that accountant doing their creative things !!!

-------------------------
Eur Ing Graham Kenyon CEng MIET TechIOSH
 23 June 2010 09:25 PM
User is offline View Users Profile Print this message


Avatar for sparkingchip.
sparkingchip

Posts: 6282
Joined: 18 January 2003

May be you are all sort of right.

The complete calculation would be a balance of the VAT saved on expenses such as buying and running vehicles etc. against the mark up and labour.

Over all it may only add less than 10% to the non-VAT registered customer.

Andy
 24 June 2010 06:45 AM
User is offline View Users Profile Print this message



normcall

Posts: 8162
Joined: 15 January 2005

"May be you are all sort of right. "

Are you sure?

-------------------------
Norman
 24 June 2010 06:47 AM
User is offline View Users Profile Print this message


Avatar for ebee.
ebee

Posts: 5776
Joined: 02 December 2004

That means we are all sort of wrong too!

-------------------------
Regards,
Ebee (M I S P N)

Knotted cables cause Lumpy Lektrik
Statistics

See Also:



FuseTalk Standard Edition v3.2 - © 1999-2014 FuseTalk Inc. All rights reserved.