FRS normal Vat

[kuro2ck]

HI all, so far i got my LTD company set up and business account just through today next will be accountant and VAT. At the moment i do a typical contract role 2days 2nights 4 days off. But on the days off im am going to try get more work for myself, doing similiar IT services. What would you guys recommend flat rate or normal VAT. Sorry if its astupid question, still trying to get ma head round it all.

[minstrel]

HI all, so far i got my LTD company set up and business account just through today next will be accountant and VAT. At the moment i do a typical contract role 2days 2nights 4 days off. But on the days off im am going to try get more work for myself, doing similiar IT services. What would you guys recommend flat rate or normal VAT. Sorry if its astupid question, still trying to get ma head round it all.

Whether or not Flat Rate Scheme (FRS) VAT is best for you depends upon the flat rate percentage you are on (determined by your industry sector) and the amount of expenses you have relative to turnover.

Assuming your flat rate percentage is 13% (that's the one for most IT contractors) then you are best off on the FRS if your VAT inclusive turnover is more than around 8 times your VAT inclusive expenses.

In most cases this means FRS is the way to go.

Also, for your first year you get to reduce the flat rate percentage by 1%, so the 13% becomes 12% and you are even better off being on FRS.

[TheFaQQer]

If you've got startup costs, then you may be better off paying normal VAT in the first quarter and then move over (e.g. furniture, office, laptop, stationery, setup costs, insurance etc that contain a VAT element).

The 1% discount is available in your first year of VAT registration, so not necessarily the date of co. registration. I'd get something into the VAT office quickly, since they are particularly slow in registering companies at the moment.

[Bluebird]

HI all, so far i got my LTD company set up and business account just through today next will be accountant and VAT. At the moment i do a typical contract role 2days 2nights 4 days off. But on the days off im am going to try get more work for myself, doing similiar IT services. What would you guys recommend flat rate or normal VAT. Sorry if its astupid question, still trying to get ma head round it all.

Only one point about your post - the above quote does not to me seem a typical role, but more like a typical inside IR35 role - you may want to read up about this as it can have a MAJOR effect on your income...

[Troll]

Let us know how long your Vat REG TAKES

[oraclesmith]

It's fairly straightforward to figure out if you'd be better off. You will almost certainly have an advantage if you buy most of your companies 'assets' up front before registering for VAT.

If we assume a typical IT services/consultancy FRS rate of 13%, then for every £10,000 income you receive you make an additional £222.50 in VAT. You would have to purchase about £1,270+VAT of goods (eg. IT equipment to sell to clients) to reclaim the same amount of VAT. I think.

If you supply those additional IT services to the general public, then you will have to charge higher prices if you register for VAT at all.

[a7awo]

When I registered for VAT and FRV a nice lady from the Vat office gave me a call and stated that although I was FlatRateVat registered I could still claim the VAT back on items over £2000. Can anyone vouch for this? Has anyone claimed VAT back whilst FRV registered?

[DaveB]

You can claim back the VAT on capital purchases over £2000 even if you are on the FRS for VAT.

[VectraMan]

The 1% discount is available in your first year of VAT registration

Is it your first year of VAT registration, or your first year of FRS registration? I've just got around to joining the FRS, but already been VAT registered for over a year.