VAT Registration

[psychocandy]

Not quite right. If you are VAT registered but NOT on the FRS then you can claim back the VAT on things your company buys. If you ARE on the FRS then you can't claim back VAT on things your company buys but in return for this, you get to keep a cut of the VAT you charge to your customers.

Compared to not being VAT registered, registering for VAT and the FRS will bring a profit of 3.8% of your ex-VAT turnover in the first year and 2.6% in the years after that.

If the value of your companies purchases/expenses (ex VAT) amount to more than 10% of your (ex VAT) turnover then it's probably not worth signing up for the FRS. If your expenses are this high then you should get VAT registered so you can claim back the VAT.

If your company pays out less than 10% in expenses then you are probably better off using the FRS (it's simpler too).

Be aware that some expenses like train travel don't have any VAT.

I'm sure your accountant can sort it all out with a minimum amount of fuss, give them a shout.

WHS +1

Cant see why you'd ever not bother to register for VAT and flat rate. As demonstrated above, its free money....

[Wanderer]

Thanks mate, I'll give my accountant a call.

You may want to ask them why they didn't suggest you register for VAT and join the FRS without being prompted. It's money for nothing (well a little bit of admin is involved but not much).

Perhaps they did mention it to you but it got lost in a pile of other generic advice.

[GlasgowBob]

Not quite right. If you are VAT registered but NOT on the FRS then you can claim back the VAT on things your company buys. If you ARE on the FRS then you can't claim back VAT on things your company buys but in return for this, you get to keep a cut of the VAT you charge to your customers.

Compared to not being VAT registered, registering for VAT and the FRS will bring a profit of 3.8% of your ex-VAT turnover in the first year and 2.6% in the years after that.

If the value of your companies purchases/expenses (ex VAT) amount to more than 10% of your (ex VAT) turnover then it's probably not worth signing up for the FRS. If your expenses are this high then you should get VAT registered so you can claim back the VAT.

If your company pays out less than 10% in expenses then you are probably better off using the FRS (it's simpler too).

Be aware that some expenses like train travel don't have any VAT.

I'm sure your accountant can sort it all out with a minimum amount of fuss, give them a shout.

Thanks mate, I'll give my accountant a call.

[Wanderer]

If the flat rate is 14.5% does that mean I invoice clients 20% VAT and wouldn't pay VAT on goods\services I buy then at end of year pay 14.5% of complete turnover? Probably giving me an extra 5% on my net profit?

Not quite right. If you are VAT registered but NOT on the FRS then you can claim back the VAT on things your company buys. If you ARE on the FRS then you can't claim back VAT on things your company buys but in return for this, you get to keep a cut of the VAT you charge to your customers.

Compared to not being VAT registered, registering for VAT and the FRS will bring a profit of 3.8% of your ex-VAT turnover in the first year and 2.6% in the years after that.

If the value of your companies purchases/expenses (ex VAT) amount to more than 10% of your (ex VAT) turnover then it's probably not worth signing up for the FRS. If your expenses are this high then you should get VAT registered so you can claim back the VAT.

If your company pays out less than 10% in expenses then you are probably better off using the FRS (it's simpler too).

Be aware that some expenses like train travel don't have any VAT.

I'm sure your accountant can sort it all out with a minimum amount of fuss, give them a shout.

[malvolio]

Hi,

I though I had looked into the flat rate and there wasn't any benefit but just had another look and don't know if I'm getting it right.

If the flat rate is 14.5% does that mean I invoice clients 20% VAT and wouldn't pay VAT on goods\services I buy then at end of year pay 14.5% of complete turnover? Probably giving me an extra 5% on my net profit?

cheers

Yep. Sounds mad but there is an underlying logic to it. Also you get 1% extra in your first year. The balance between VAT charged and VAT paid back is yours, but is liable for Corporation Tax, just like any other income.

[GlasgowBob]

Not sure why the agency are telling you this, are you sue they are insisting on it?

Have a look at flat rate vat, this will save you money anyway, think of it as free money.

Hi,

I though I had looked into the flat rate and there wasn't any benefit but just had another look and don't know if I'm getting it right.

If the flat rate is 14.5% does that mean I invoice clients 20% VAT and wouldn't pay VAT on goods\services I buy then at end of year pay 14.5% of complete turnover? Probably giving me an extra 5% on my net profit?

cheers

[GlasgowBob]

I suspect they're just thick or don't understand VAT.

The only reason I can think of is to chop down your rate by convincing you the rate already includes VAT. They could claim it back from HMRC, and you'd have to pay it to HMRC, so you'd go short.
This shouldn't happen though as rates in contracts usually exclude VAT, and your invoices wouldn't include the relevant VAT breakdown and VAT reg number.

Best check the wording of the rate in your contract.

Have they already been paying your invoices for a while?

I think that is the case. Someone asked in an email if I could get it sorted that afternoon

Not started yet but my contract is my rate plus vat so thats okay.

Thanks for the replies, its just as I thought but was wondering if I had missed a reason for them needing it.

[CheeseSlice]

Lets say it was the agency that needed me to be registered and they just said that it was the client. Not like agencies I know, but if they did, is there any reason for it?

I suspect they're just thick or don't understand VAT.

The only reason I can think of is to chop down your rate by convincing you the rate already includes VAT. They could claim it back from HMRC, and you'd have to pay it to HMRC, so you'd go short.
This shouldn't happen though as rates in contracts usually exclude VAT, and your invoices wouldn't include the relevant VAT breakdown and VAT reg number.

Best check the wording of the rate in your contract.

Have they already been paying your invoices for a while?

[CheeseSlice]

It should be only you who decides whether you're VAT registered or not, and I doubt anyone (other than HMRC) could demand that you are registered. You've already done your homework on the threshold, so you should be fine to continue.

I can't even start to imagine why the Client Co should care about this.

Does your contract say anything about VAT in your daily/hourly rate?

[GlasgowBob]

Bizarre. The client pay the bill to the agency, not to you/your ltd co.

I know. The agent just didn't seem to understand, they were just adamant that they needed a registration number.

Lets say it was the agency that needed me to be registered and they just said that it was the client. Not like agencies I know, but if they did, is there any reason for it?

[Waldorf]

Hi All,

Just been told by my agency that the client requires me to be VAT registered. I've never had this before, income over last couple of years has been below the threshold and I expect it to be next year.

Anyone know why the client would need this?

Cheers

Not sure why the agency are telling you this, are you sue they are insisting on it?

Have a look at flat rate vat, this will save you money anyway, think of it as free money.

[kingcook]

Just been told by my agency that the client requires me to be VAT registered. I've never had this before, income over last couple of years has been below the threshold and I expect it to be next year.

Anyone know why the client would need this?

Bizarre. The client pay the bill to the agency, not to you/your ltd co.

[GlasgowBob]

Hi All,

Just been told by my agency that the client requires me to be VAT registered. I've never had this before, income over last couple of years has been below the threshold and I expect it to be next year.

Anyone know why the client would need this?

Cheers