VAT query

[VectraMan]

My previous accountant told me to go with the VAT Flat Rate Scheme. I had already worked out I'd be better off outside it, so I queried it. I was right.

I was better off inside, but it was only about £10 per month because of the mileage I was doing. Don't assume the FRS is all good.

[RichardCranium]

Because they have a lazy "tick sheet" way of dealing with Ltds

and one of the ticks on their sheet says

"Register company for VAT".

My previous accountant told me to go with the VAT Flat Rate Scheme. I had already worked out I'd be better off outside it, so I queried it. I was right.

When I changed accountants, the new one said "and you are in the FRS of course". He was surprised when I said "No" and he said it is an automatic no-brainer. I explained I'm better off outside it.

Dammit, I've gone through the past 8 years' accountants: every year I am better off outside the FRS.

So, yes, accountants DO give advice without thinking, let alone checking an individual's circumstances.

[tim123]

Hi Guys

I have been told by Badenoch & Clarke the following :

I need to register for VAT , why ?

Thanks

Because they have a lazy "tick sheet" way of dealing with Ltds

and one of the ticks on their sheet says

"Register company for VAT".

I was once told by my accountant (in the era when it made financial sense) "you need to buy a company car", without him making the slightest attempt to find out whether I had the need/desire for a valuable car or not.

tim

[david@purpleaccounts.com]

In most cases, being on the flat rate scheme is of financial benefit to the contractor. However, you should note that any vat you incur on your purchases cannot be reclaimed under this scheme. With the exception of capital purchases in excess of £2000 inc VAT.

[Gonzo]

You should consider though how being VAT registered might affect your customers and your competitiveness becuase once you are VAT registered your prices go up by 17.5%.

If your customers are all businesses that are VAT registered they won't care because they simply reclaim any VAT they pay.

If your customers are the public then it means you prices become 17.5% higher overnight.

[Mor4]

Thank you

Thanks Hex !!!!!

[Hex]

The way it works is like this:

You invoice the client at £2,500 per month plus VAT at 17.5% - so your invoice total is £2,500 + £437.50 = £2,937.50

You pay VAT to the VAT man at the rate of 12% (in year 1 and 13% thereafter) of the invoice total (i.e. the £2,937.50). So you pay him 0.12 * 2,937.50 = £352.50

So you're left with £2,937.50 - £352.50 = £2,585.00

So you're £85 on a £2,500 invoice better off than you would be if you didn't charge VAT.

[Mor4]

Sorry for being stupid lol

One final question :

Will i have to pay vat on my turnover ?

Thank you for your help

[slackbloke]

so it would be worth it ?

how much would i save on £30k turnover.

Get a calculator and try 30000 * 0.034 !

[Mor4]

The current threshold is £67,000, however it can be worth registering even if you are under this as you can join the Flat Rate Scheme which would save you a nice sum.

The saving would depend on what it is you do, however if you are in IT, then the saving would be 3.4% in year 1, so say £1700 on a £50K turnover.

Alan

so it would be worth it ?

how much would i save on £30k turnover.

[Nixon Williams]

The current threshold is £67,000, however it can be worth registering even if you are under this as you can join the Flat Rate Scheme which would save you a nice sum.

The saving would depend on what it is you do, however if you are in IT, then the saving would be 3.4% in year 1, so say £1700 on a £50K turnover.

Alan

[Sockpuppet]

Hi Guys

I have been told by Badenoch & Clarke the following :

I need to register for VAT , why ?

My ltd's won't be over £30,00.


Thanks

Ok and again in English.

You don't need to register for VAT unless you earn over the threashold (somewhere north £60k afaik).

[Mor4]

Hi Guys

I have been told by Badenoch & Clarke the following :

I need to register for VAT , why ?

My ltd's gross won't be over £30,00.


Thanks