Hi guys,
I am an IT contractor working in London, my turnover is around £84K PA and I charge £450 per day.
I can charge £550 per day however that would mean I would go over the threshold and bill after holidays and absences and downtime probably around £100K PA. Problem is, once you take off the 20% for VAT and add on the £3-4K I can claim back we're pretty much back at £83K. There seems to be no sense in upping my rate and in fact the time wasted in registering, managing my VAT account, reclaiming the measly £3-4K from my outgoings seems like a foolish waste of time and is punitive on small businesses working in and around the VAT threshold. The only one scoring is HMRC, making us run the extra miles for NO benefit. I don't need 'kudos' of charging VAT because my client list is enviable and potential clients don't mind that I don't charge VAT because my work is of a high calibre that this is not an issue. And the reward for that is spending hours and hours working out how to reclaim a fraction of what you are paying HMRC. No thanks!
Are any other contractors in this situation?
Hypothetically, Even if you earn £85,000,01 you end up paying £20K to HMRC - and reclaim maybe £4k so you're out of pocket a massive £17k compared to earning £84,999.00 where you pay no VAT at all - this is madness and extortion if you ask me on top of the Corporation tax and all the other income they're taking from small businesses.
I am an IT contractor working in London, my turnover is around £84K PA and I charge £450 per day.
I can charge £550 per day however that would mean I would go over the threshold and bill after holidays and absences and downtime probably around £100K PA. Problem is, once you take off the 20% for VAT and add on the £3-4K I can claim back we're pretty much back at £83K. There seems to be no sense in upping my rate and in fact the time wasted in registering, managing my VAT account, reclaiming the measly £3-4K from my outgoings seems like a foolish waste of time and is punitive on small businesses working in and around the VAT threshold. The only one scoring is HMRC, making us run the extra miles for NO benefit. I don't need 'kudos' of charging VAT because my client list is enviable and potential clients don't mind that I don't charge VAT because my work is of a high calibre that this is not an issue. And the reward for that is spending hours and hours working out how to reclaim a fraction of what you are paying HMRC. No thanks!
Are any other contractors in this situation?
Hypothetically, Even if you earn £85,000,01 you end up paying £20K to HMRC - and reclaim maybe £4k so you're out of pocket a massive £17k compared to earning £84,999.00 where you pay no VAT at all - this is madness and extortion if you ask me on top of the Corporation tax and all the other income they're taking from small businesses.
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