Simple VAT Question

[d000hg]

How can I tell which money coming into my company would be subject to VAT if I VAT-register?

[Lewis]

You would have to add VAT to all your invoices. You would then pay this VAT to HMRC (minus any VAT you have paid out when buying things for company). However if you register for Flat Rate VAT you pay a set % of your invoices (+VAT) to HMRC and don't deduct VAT from purchases. For businesses which don't buy much this is often much better than normal VAT. In my case I have benefited a few grand from the Flat Rate scheme, thank you HMRC

You need to look up your business activity to find your exact FRS percentage, you get a 1% discount during the first year. It really is money for nothing in most cases!

[KevinS]

If you are VAT registered, then all invoices generated are subject to VAT..

[oracleslave]

If you are VAT registered, then all invoices generated are subject to VAT..

Assuming you are providing the service to a UK based company.

[malvolio]

How can I tell which money coming into my company would be subject to VAT if I VAT-register?

Simple answer - you don't understand VAT 'cos that's actually the wrong question...

Anything you sell must have VAT added to the cost (and that includes incidental expenses). So the VAT you are charging will be recorded as both Net value (yours) and VAT (the Revenue's).

Anything you buy will similarly be separated into Net and VAT (although the VAT element may be zero if the supplier isn't registered or it's something like train fares and bank charges which are not VATable)

So you (should) wind up with two totals in your accounts, Input VAT from Sales and Output VAT from Purchasses. The balance is what it payable (or due back).

So standard advice applies - RTFM!

[TheFaQQer]

So standard advice applies - RTFM!

Mods! Mods! Denny! Mods!

Mal's being a bully again!

[Archangel]

You would have to add VAT to all your invoices. You would then pay this VAT to HMRC (minus any VAT you have paid out when buying things for company). However if you register for Flat Rate VAT you pay a set % of your invoices (+VAT) to HMRC and don't deduct VAT from purchases. For businesses which don't buy much this is often much better than normal VAT. In my case I have benefited a few grand from the Flat Rate scheme, thank you HMRC

You need to look up your business activity to find your exact FRS percentage, you get a 1% discount during the first year. It really is money for nothing in most cases!

Don't forget the interest on your company bank account, this part of your turnover, so should have the FRV applied to it.

[Sockpuppet]

Also assuming you are not selling zero-vat rated products.

[chris79]

Also ask yourself the question do you need to be VAT registered, and does it benefit you to be so if you are NOT required.

[Ardesco]

The majority of contractors should be bringing in £60,000 a year unless they are on below par rates or taking quite a bit of time off.

Generally speaking if you are just contracting it is in your interests to get VAT registered and go on the flat rate scheme. All of your customers will be VAT registered as well and claim back the VAT so they will not even blink when you ask for VAT as well.

If you have a Plan B or sell your services to the public VAT registration can push up the price of your products/services and make you less competitive than somebody who is not VAT registered, however this usually doesn't apply to contractors.