Approaches for dealing with a non VAT registered client

[Largely Ginny]

I am a little confused with the way you have worded this.

They aren't exempt from paying VAT on services, they've just misread your quote, or your formatting of it (in a footer?) was so bad, it misled them.

Whenever I quote, I write it as £X +VAT so there is no confusion.

Either way, someone is swallowing 20%. You don't need to "add a 20% surcharge". Either they accept the real intended price plus vat, or you accept the cut.

I've had the conversation & they're going to meet me halfway. I'm going to reduce my quote by 10% and they'll pay the 20% VAT.

[jmo21]

Good afternoon - I've submitted a quote for a piece of work for a small charity and they have acceptd my proposal.

Only sticking point from my end is that I've found out they are not VAT registered so I'm going to have to stump up 20% of my fee upon payment.

The quote did mention that prices are quoted ex VAT - how would you suggest approaching this - would it be acceptable at this stage to contact the client and tell them I'm going to have to add a 20% surcharge to cover my losses?

Just wondering if anyone else has been in this position.

I am a little confused with the way you have worded this.

They aren't exempt from paying VAT on services, they've just misread your quote, or your formatting of it (in a footer?) was so bad, it misled them.

Whenever I quote, I write it as £X +VAT so there is no confusion.

Either way, someone is swallowing 20%. You don't need to "add a 20% surcharge". Either they accept the real intended price plus vat, or you accept the cut.

[jamesbrown]

There is no way you can argue that your company and self-employed businesses are separate trades when they are engaged in the same or similar activities. In this case, it would be literally the same activity. Were you investigated, it would all be income to your company. Also, VAT is especially not something you avoid/evade.

[Lance]

Well, the simple solution I guess is to get them to pay into my personal account and I just declare it on my SA at the end of the year.

You need to invoice them personally. You are a different legal entity to your LTD.
Some would argue that you are committing VAT fraud by changing a business relationship with the sole intention of avoiding VAT charges.
HMRC certainly would argue that. And seeing as you sold the service to the client as via LTD. company, and are now proposing to do it personally they have a fair argument.

In reality you can run a LTD. company as well as being self-employed, but be careful you don't blur the boundaries.
Also inform HMRC that are now self-employed.

[pr1]

Just go the whole hog and get them to pay cash in hand

[Largely Ginny]

Well, the simple solution I guess is to get them to pay into my personal account and I just declare it on my SA at the end of the year.

[ladymuck]

Good afternoon - I've submitted a quote for a piece of work for a small charity and they have acceptd my proposal.

Only sticking point from my end is that I've found out they are not VAT registered so I'm going to have to stump up 20% of my fee upon payment.

The quote did mention that prices are quoted ex VAT - how would you suggest approaching this - would it be acceptable at this stage to contact the client and tell them I'm going to have to add a 20% surcharge to cover my losses?

Just wondering if anyone else has been in this position.

What loss? You mean you'll make less profit if your quote is all they pay (i.e. considered to be VAT inclusive)?

[NotAllThere]

It's a business decision. Morality comes into it, but essentially you need to decide how much you care.. combined with having to recoup the losses if they decide not to use you.

It could be valuable as a bit of PR. (Some idiots would say "virtue signaling", but the whole point of virtue signalling is that it doesn't really cost you anything).

[Largely Ginny]

If your quote really did say "ex VAT" then just submit your invoices with the VAT added as usual. I don't see the problem, they must deal with VAT registered suppliers all the time

If you're retrospectively realising your quote didn't actually explicitly say "ex VAT", then you probably need to have the awkward conversation with them, or take the hit

it's in the small print in the footer of the word doc & I don't think they saw it - issue was raised when I mentioned VAT in a phone conversation with them. I'm building a new ecommerce website for them & it'll probably be their single biggest capital outlay this year so the 20% will be quite a hit for them.

I guess as nothing is legally binding they can simply pull out. In the meantime I'll have to put ex VAT in bigger bolder text.

[pr1]

Good afternoon - I've submitted a quote for a piece of work for a small charity and they have acceptd my proposal.

Only sticking point from my end is that I've found out they are not VAT registered so I'm going to have to stump up 20% of my fee upon payment.

The quote did mention that prices are quoted ex VAT - how would you suggest approaching this - would it be acceptable at this stage to contact the client and tell them I'm going to have to add a 20% surcharge to cover my losses?

Just wondering if anyone else has been in this position.

If your quote really did say "ex VAT" then just submit your invoices with the VAT added as usual. I don't see the problem, they must deal with VAT registered suppliers all the time

If you're retrospectively realising your quote didn't actually explicitly say "ex VAT", then you probably need to have the awkward conversation with them, or take the hit

[Largely Ginny]

Good afternoon - I've submitted a quote for a piece of work for a small charity and they have acceptd my proposal.

Only sticking point from my end is that I've found out they are not VAT registered so I'm going to have to stump up 20% of my fee upon payment.

The quote did mention that prices are quoted ex VAT - how would you suggest approaching this - would it be acceptable at this stage to contact the client and tell them I'm going to have to add a 20% surcharge to cover my losses?

Just wondering if anyone else has been in this position.