Reply to: VAT registered - But not flat rate registered yet - Am I losing money?

[BolshieBastard]

Interesting comments here Bolshie.

Must admit if I was that worried I'd still rather pay for the full monty insurance instead. Still cheaper than £100 a month surely?
Also, what are you going to do if your income ever means you'll exceed the VAT threshold? Surely you must be close now? Or do you make a deliberate attempt not to do so?

Agree with you about the travelling thing mind. Not for me either. Would rather stay home and get less of a rate than stay away all week chasing the bigger bucks...

At the moment, Im quite happy to manage my contract income to remain under any current VAT threshold. I monitor it very closely. I rarely take time off during contracts and tend to pick and choose which contracts I will go for so, sometimes I will have 4 or 5 weeks between roles. Im currently taking time out after my last contract just finished so there's no hurry to find a role in the new year.

Of course, it may be that in the new year I have to work away which will mean staying in diggs. If that is the case and the diggs do required payment including VAT then, I shall have to re visit the issue and likely have to register. But until then I wont.

Obviously, if one's contract income is at or above the VAT threshold and people's company's have VATable expenditure, then registration tends to become a legal requirement which I would not recommend avoiding. However, where income is below the threshold and there is no regular VAT expenditure, I do not think people should rush in and register for the sake of 100 quid a month without weighing up the consequences.

I fully appreciate that for 100 quid, one can buy IR35 insurance. I should point out I already have insurance to cover investigation costs etc.

However, I would point out that anyone who has been placed under investigation by HMRC will know that even having insurance does not remove all the stress and worry that this brings.

I also fully appreciate that being registered for VAT may not result in any investigation of any sort. Indeed, my last company was not subjected to a VAT inspection in its 6 year existence. However, neither does that mean that you wont be on the end of one.

As I said, I like to minimise my risk and, it is down to one's perception and risk assessment. By the same token, I'll probably never win the lottery either but I do buy a ticket most weeks!

[psychocandy]

Interesting comments here Bolshie.

Must admit if I was that worried I'd still rather pay for the full monty insurance instead. Still cheaper than £100 a month surely?
Also, what are you going to do if your income ever means you'll exceed the VAT threshold? Surely you must be close now? Or do you make a deliberate attempt not to do so?

Agree with you about the travelling thing mind. Not for me either. Would rather stay home and get less of a rate than stay away all week chasing the bigger bucks...

[BolshieBastard]

I'd like to be on your daily rate if you're happy to give away £100 a month....

(edit: but then again it cant be that good if your under the VAT threshold)

100 quid a month is no big deal. Its what 2.5 hours work! One doesnt have to work all the hours god sends to have a very good standard of living in different parts of the country. I dont live in or anywhere near london. My rate is very good for my location, thanks very much, just finished a contract at 350 a day. And the best bit, I get to choose which contract I should go for unlike some poor souls on here who have to travel from one end of the country to another because they 'need the work'!

I know which I prefer.

wow that's about a 10 million/1 + chance of happening then for a 100 insurance premium your are paying each month by not having - Do you also have Lightning strike insurance.?

why not sump up 2 months Vat money buy a PCG+ membership and forget all about IR35

As far as Im concerned, PCG can go fornicate themselves, thanks. Wouldnt touch them with a barge pole. I think the odds are considerably less than that. Still even huge odds dont really matter if you are the one selected. I mean nearly every Saturday someone win the lottery and the odds there are what, 40 million to 1? Do you buy a ticket or two at those odds?

But if you only claim for what is legal and on the FRS is you never stick a invoice over £2k in then that is pretty academic then I'm not sure what you're worrying about.

Its all down to one's individual risk assessment. If your home is used as home \ office, HMRC have powers to enter your home.

If you are registered for VAT HMRC can perform a VAT inspection at any time (quite reasonable if you are using their scheme). If people serious dont think hMRC will use any avenue to open other investigations including IR35, then that is their look out. To me, its one less opportunity for HMRC to open any investigation.

With less than £100 per month you can buy a TLC35 policy.

And again, even with the policy, there's no guaranteeing it will pay out although QDOS say there's no issue. You still have the antagonism, worry and stress of any investigation that may arise when it arises.

As I said, each to their own. sincerely hope you dont get investigated, even if any of you do have insurance.

[Clare@InTouch]

But if you only claim for what is legal and on the FRS is you never stick a invoice over £2k in then that is pretty academic then I'm not sure what you're worrying about.

Agreed. Also, these type of simple investigations are usually dealt with via letter, and it's easy to just submit invoices with a summary to show how the VAT returns were calculated. There's not a great deal that can go wrong under FRS, the most common mistake is taking the percentage from net rather than gross.

[xing]

Nope, not for filling in the form.

I just dont see 100 quid a month as a big enough bribe from HMRC to give them a further opportunity to enter my home and instigate a VAT enquiry that could potentially eventually lead to an iR35 investigation.

If you are happy to take that risk for a measely 100 quid then good for you.

With less than £100 per month you can buy a TLC35 policy.

[Sockpuppet]

Nope, not for filling in the form.

I just dont see 100 quid a month as a big enough bribe from HMRC to give them a further opportunity to enter my home and instigate a VAT enquiry that could potentially eventually lead to an iR35 investigation.

If you are happy to take that risk for a measely 100 quid then good for you.

But if you only claim for what is legal and on the FRS is you never stick a invoice over £2k in then that is pretty academic then I'm not sure what you're worrying about.

[tarbera]

does not compute

Nope, not for filling in the form.

I just dont see 100 quid a month as a big enough bribe from HMRC to give them a further opportunity to enter my home and instigate a VAT enquiry that could potentially eventually lead to an iR35 investigation.

If you are happy to take that risk for a measely 100 quid then good for you.

wow that's about a 10 million/1 + chance of happening then for a 100 insurance premium your are paying each month by not having - Do you also have Lightning strike insurance.?

why not sump up 2 months Vat money buy a PCG+ membership and forget all about IR35

[psychocandy]

Nope, not for filling in the form.

I just dont see 100 quid a month as a big enough bribe from HMRC to give them a further opportunity to enter my home and instigate a VAT enquiry that could potentially eventually lead to an iR35 investigation.

If you are happy to take that risk for a measely 100 quid then good for you.

I'd like to be on your daily rate if you're happy to give away £100 a month....

(edit: but then again it cant be that good if your under the VAT threshold)

[psychocandy]

Oh. I didn't. Thanks for pointing that out.

Still basically free money though unless you're planning on spending loads on stuff which most contractors dont.

[BolshieBastard]

You'd throw away £100+ per month, just because you didn't want to spend a one-off 10 minutes filling in the VAT FRS form?

Nope, not for filling in the form.

I just dont see 100 quid a month as a big enough bribe from HMRC to give them a further opportunity to enter my home and instigate a VAT enquiry that could potentially eventually lead to an iR35 investigation.

If you are happy to take that risk for a measely 100 quid then good for you.

[kingcook]

I wouldnt register for the VAT FRS either unless your turnover is more than the threshold. If you are under the VAT threshold, you'll only get about 1300 quid a year or a 100 a month off HMRC.

You'd throw away £100+ per month, just because you didn't want to spend a one-off 10 minutes filling in the VAT FRS form?

[BolshieBastard]

I wouldnt bother registering for VAT unless you have lots of vat-able expenditure ie hotels when working away from home etc.

I wouldnt register for the VAT FRS either unless your turnover is more than the threshold. If you are under the VAT threshold, you'll only get about 1300 quid a year or a 100 a month off HMRC. And for that princely sum, you give them another legitimate way of entering your home and \ or doing a VAT enquiry which could lead on to a status enquiry and ultimately an IR35 enquiry.

I'd rather 'manage' my turnover to be under the threshold and not take HMRC's 'shilling' giving them further opportunities to open investigations.

But each to their own risk assessment.

[myco]

An update I should have posted earlier : I did receive the FRS approved from the start of my first VAT quarter.

Happily invoicing and making the extra bit off the FRS ever since.

[Greg@CapitalCity]

I have done this. Do they generally email you back with a confirmation of the FRS start date? Or should I expect something in the mail in a week or so?

Nice one - expect a confirmation letter to turn up in the post. It may take 2-4 weeks to come through.

@MarillionFan, its better (financially) to go onto the flat rate scheme when the amount of 'profit' you make from being on the flat rate scheme consistently beats the amount of VAT you spend on company expenses and purchases. For example, if you invoice £6,000 a month, and are in IT where the FRS trade sector % is 14.5%, then you would bill £6,000 x 20% = £1,200 in VAT to your client, and would have to return (£6,000 + 20%) x 14.5% = £1,044 in VAT to the tax office in your VAT return. Your 'profit' from the FRS is £156. If you spend less than £156 per month in VAT on expenses and assets, then you are better off on the FRS.

[MarillionFan]

So when is it more beneficial to be on the FRS scheme. I'm normal VAT registered but my accountant suggested I swap.