Vat

[zamzummim]

Do you people charge agreed daily rate + VAT?

i.e. if you agree £500 per day, you charge an extra 17.5%

 

[where did my id go?]

only if you're vat registered.

 

[zamzummim]

yes - need to be registered now, got away with it till now(worked on contracts in Europe mainly) or is there a way I can stay not registered while working in the UK?

 

[DimPrawn]

Yes, turnover less than about £60K and you don't have to be VAT registered.

 

[Sockpuppet]

yes - need to be registered now, got away with it till now(worked on contracts in Europe mainly) or is there a way I can stay not registered while working in the UK?

If you're selling to businesses then add the VAT. You can claim the VAT back and they don't mind (unless they are not Vat reg) so its better to be in my eyes.

 

[zamzummim]

so the way it works if I register for VAT, I claim 17.5% on my invoices, then end of the year I pay the 17.5% back to the tax office? Hence no difference to my income?

 

[MarillionFan]

You pay it every quarter. It stays in your bank account and you earn money on it. If you buy a computer for £1175, you claim £175 back. So it only costs you £1000.

Kapiche.

 

[DaveB]

If you have minimal vat'able expenses it's worth registering for the Flat Rate Scheme as well. You charge VAT out at 17.5% but pay the VAT man 12% (the actual rate depending on what your business is classed as, with a 1% discount of the first 12 months from VAT registration) of the gross and keep the rest. The trade off is that you can't claim VAT on any purchases etc under £2000. Overall you should be anywhere from £600-1200 per quarter better off.

All the gory details are here :Flat Rate Scheme for small businesses .

 

[SandyDown]

Dave, dumb blonde question - how does the flat rate works if I claim expenses (through the invoice) the expenses will include mileage (I understand the IR now expect to show VAT petrol receipts) so my invoice should look:

1- Consulting services £xxxx
2- Expenses incurred £xxxx
Total = £1 +2

VAT = 17.5 % of total


Then every quarter I pay flat rate to IR?

 

[DaveB]

Dave, dumb blonde question - how does the flat rate works if I claim expenses (through the invoice) the expenses will include mileage (I understand the IR now expect to show VAT petrol receipts) so my invoice should look:

1- Consulting services £xxxx
2- Expenses incurred £xxxx
Total = £1 +2

VAT = 17.5 % of total


Then every quarter I pay flat rate to IR?

Yep, that's about it. You still charge VAT to the client as per normal and pay the Flat Rate to HMRC. What you can't then do is claim back the VAT portion of business costs unless it's a capital purchase of over £2000.

So for example if you buy a new PC for less than £1000 you cant clam the VAT back on it. For over £2000 you can.

Likewise if you sub out a contract and the subbie charges VAT on their invoice to you, you can't claim back the VAT yourself, although you'd still charge VAT to the client as normal and pay the flat rate on it to HMRC.