[Tax panning][VAT][17/18] Which VAT scheme for an IT contractor?

[TheCyclingProgrammer]

Honestly, stick to the standard scheme. I know the legislation isn't finalised regarding the FRS changes but I'm doubtful it will change in any significant way. Unless your expenses are < approx. £1k you'll be better off financially on the standard scheme, even if it requires a bit more paperwork and VAT receipt keeping.

[TheCyclingProgrammer]

The graded Flat rate vat percentages have been scrapped so 14.5% last year becomes 16.5% this Tax year, which I am advised cancels out most financial benefits.

That's not quite right...nothing has been scrapped as such, the new 16.5% rate only applies to "low cost traders". Which, unfortunately, going by HMRC's definition of "low cost' (services, capital expenses and subsistence do not count) includes most of us.

[chopper]

That's what I'm saying too - based on a 220 day year at 500/day, you're down £2,640 in the next financial year from this tax grab.

It isn't a tax grab. FRS was intended to simplify VAT for smaller businesses, not for smaller businesses to make a profit on.

It means our business model as a smaller business, we're better outside FRS and on the standard scheme from April.

[TheCyclingProgrammer]

It isn't a tax grab. FRS was intended to simplify VAT for smaller businesses, not for smaller businesses to make a profit on.

True, but the percentages were also set for each business category so that businesses should still indirectly recover their input VAT costs through the surplus they get to keep. The new rate breaks that as it excludes a range of costs for no good reason.

[northernladuk]

I wonder what the OP is taking away from both of his two threads. Both got so complicated there was no clear answer but didn't engage with us again in either.

[AndrewK]

Just out of curiosity. I don’t have accountant. Do you northernladuk imply in that case I am not allowed to ask questions? Accountants I tried are just a waste of money and time. I think it is reasonable in contractor’s tax section to ask questions about accounting and taxes. If you don’t like that topic, feel free to comment in general section.

[northernladuk]

Just out of curiosity. I don’t have accountant. Do you northernladuk imply in that case I am not allowed to ask questions? Accountants I tried are just a waste of money and time. I think it is reasonable in contractor’s tax section to ask questions about accounting and taxes. If you don’t like that topic, feel free to comment in general section.

I don't expect someone come on and expect us to set up their business for them. If it wasn't for a couple of accountants that give their time this would be just a forum of your peers. Great place to discuss yes, but not to get expert opinion. You also only get an answer to the exact question, both OPs questions were pretty complex and missed a lot of content and detail which is why both threads got so convoluted I can't see he got an answer he was comfortable with.

I'd say you need to start a thread asking why you can't pick a decent accountant unless you are one of the very few on here that are competent enough to do it yourself. A good accountant saves you both money and time. Mine is worth it just for not buggering about with Vat and other returns and FreeAgent let alone the other services.

[Yorkie62]

For what it's worth. My aacountant is recommending I deregister from the flat rate vat scheme as of April 17. In addition to this I asked about reclaiming vat on milage fuel which apparently I can do providing I have vat receipts to back this up.

So on say a 100 mile company journey. Using hmrc rates for milage fuel, i.e. 11p per mile Fuel costs would be £11 including vat. Therefore I would be able to reclaim £1.84 per 100 miles. Extrapolate this to the 10k mile per annum you get £184 of reclaimed VAT.

Almost make deregistration worth it on its own.