So it's not exactly contracting but regarding my plan B and I know i'll get the answers here.
I want to know if charging VAT to the customer affects how they percieve the price.
Plan B sells a product to a retailer, who in turn sells that to a consumer.
Scenario A) - Plan B registered for VAT.
So, they, the retailer, charges VAT to the customer (if of course they are VAT registered, but unlikely (I think) that a retailer wouldn't be). Therefore a point of sale price of £200 + 20% (£240) is acheived by the retailer.
If Plan B is registered for VAT, then I sell the product at £150 + 20% (£180) to the retailer.
The retailer pays a VAT bill at the rate of VAT in - VAT out (£40-£30).
Retailer makes a profit (£60 margin - £10 VAT due) = £50.
Scenario B) - Plan B not registered for VAT.
Sale price is £200 + 20% (£240).
I'm not registered for VAT, I sell the product for £150 to the retailer.
The retailer pays a VAT bill at the rate of VAT in - VAT out (£40-£0).
Retailer makes a profit (£90 margin - £40 VAT due) = £50.
I think i've just worked out by writing this that it doesn't matter, but would be happy for someone to confirm my thoughts are correct.
I want to know if charging VAT to the customer affects how they percieve the price.
Plan B sells a product to a retailer, who in turn sells that to a consumer.
Scenario A) - Plan B registered for VAT.
So, they, the retailer, charges VAT to the customer (if of course they are VAT registered, but unlikely (I think) that a retailer wouldn't be). Therefore a point of sale price of £200 + 20% (£240) is acheived by the retailer.
If Plan B is registered for VAT, then I sell the product at £150 + 20% (£180) to the retailer.
The retailer pays a VAT bill at the rate of VAT in - VAT out (£40-£30).
Retailer makes a profit (£60 margin - £10 VAT due) = £50.
Scenario B) - Plan B not registered for VAT.
Sale price is £200 + 20% (£240).
I'm not registered for VAT, I sell the product for £150 to the retailer.
The retailer pays a VAT bill at the rate of VAT in - VAT out (£40-£0).
Retailer makes a profit (£90 margin - £40 VAT due) = £50.
I think i've just worked out by writing this that it doesn't matter, but would be happy for someone to confirm my thoughts are correct.
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