Nailed my first Contract

[GillsMan]

Hi,

Thanks for the Info, my daily rate is £560 so will easily go above the VAT threshold (initial 6 months contract but can be extended).

Nope. £560 per day for six months works out at £67,200 based on an average working month of 20 days. So some way short of the threshold to be fair. You may not last the contract duration, never mind what will happen at the end.

I didn't register for VAT until I'd been in business for about four or five months I think. It's serious stuff, VAT. You don't want to mess up your VAT returns, so tread carefully. It's clear there's a lot you don't know, and if you jump in feet first without knowing what you're doing you'll end up in a world of pain.

[northernladuk]

Thanks for the Info, my daily rate is £560 so will easily go above the VAT threshold (initial 6 months contract but can be extended).

Never bank on an extension. The client could walk you on the spot any time during the 6 months so notice periods are pretty worthless and the promise of extensions at this point is just a waste of everyone's time. You are a flexible resource so are at the mercy of timescales and budget which permie's don't tend to be. Assume you will have nothing at the end and if they extend then happy days. Expecting an extension will only end in tears. Could also be a MoO issue as well but not focussing on that just now.

[TheFaQQer]

I will be appointing my wife as a worker of my company to get maximum tax efficency as well as pay myself dividends.

If she is an employee, then make sure you do it right. If she is a shareholder, make sure you do it right.

As its my first contract i have been told that i should get this IR35 checked which i will do using a reputable company (what are the usual charges?).

Some would say that you should get your contract reviewed whether it's your first contract or you hundredth. Unless you know exactly what to look for, then it's a daft idea not to get it done.

My question was really do they know they need to add VAT on top of my normal daily rate or do i need to specifically mention it and have it mentioned on my contract when they send this to me.

Who here knows what your client knows? Make sure the contract is clear whether the rate includes VAT or not, and make sure you invoice correctly, particularly if you are starting work while your VAT registration is still pending.

[SpontaneousOrder]

I didn't register for VAT until I'd been in business for about four or five months I think. It's serious stuff, VAT. You don't want to mess up your VAT returns, so tread carefully. It's clear there's a lot you don't know, and if you jump in feet first without knowing what you're doing you'll end up in a world of pain.

This makes me nervous, because I always thought it was pretty straight forwards and was about to say 'of course you should register for flat rate VAT (unless there is a specific reason not to)'.

[malvolio]

This makes me nervous, because I always thought it was pretty straight forwards and was about to say 'of course you should register for flat rate VAT (unless there is a specific reason not to)'.

It depends if being VAT Registered prices you out of the market or if you are carrying a significant level of VATable expenses such as hotel bills...

FRS is usually a good idea, but not under all circumstances. You need to do the sums.

[TBJ]

You can voluntarily register for VAT, it saves a lot of head aches further down the line.