To be or not to be (VAT that is)

Discussion in 'Plumbers' Talk' started by Bigplumber, Nov 16, 2005.

  1. Bigplumber

    Bigplumber New Member

    What is the general feelings about vat. I had to go vat registered two years ago, but as I let turnover fall, I can now deregister. I lost a lot of work over that period as well. So been spending to get the vat back on my stuff before end of month. However, was thinking of setting up another company not vat reg for bathrooms etc, and keeping the vat one for emergency work etc. Most punters don't mind paying it for a £50-£100 job but a £3000 bathroom, they just want cash prices and as we all know thats ilegal. Any thoughts?
     
  2. bathstyle

    bathstyle Active Member

    I only fit Bathrooms now so it's totally impossible for me to stay under the threshold.

    Going VAT reg. was the best thing that ever happened to me, a bit of a pain in the beginning but after rethinking my strategy it's worked well for me. I will always maintain that being VAT registered gives you a certain amount of credibility.
     
  3. Bigplumber

    Bigplumber New Member

    Now thats what I think,as well. My last company was a Ltd one and that also helped. It's just this vat element of an expensive job. I think I'll see the accountant tomorow and discuss the options, but setting a new company up in the wifes name seems a half way house to me. I'm not trying to avoid my taxes here, as all cheques and cash go through my books just logical business sence.
     
  4. bathstyle

    bathstyle Active Member

    Sounds like seeing the Accountant would be the best thing for you, the new company in your wifes name might not be workable.

    Just stick with being Limited and add a few letters after your name as well if that helps ;)
     
  5. Bob Property

    Bob Property New Member

    If you have two businesses, one VAT reg and one not, then you need to have a good reason for separating the two. (Two limited companies may work) Otherwise you risk the VAT man saying you are running 2 business just to keep under the VAT threashold and he may be able to add the two together and take the VAT on the lot.
    There is the advantage of looking a decent sized company because you are VAT reg and some of your commercial customers may expect it. At the lower end of the scale, doing repairs for domestic customers, it is just another cost on the bill to them and could make you less competitive. I have de-registered as I won't make the turnover and don't expect to for a year or two.
     
  6. Bigplumber

    Bigplumber New Member

    Cheers Bob. Kind of thinking of the non vat route now. The worst customers are the rich ones, I live in Middlewich so do a lot in Alderley Edge etc. The poor guy in a council house never quibbles over the vat, as I take plastic as well.
     
  7. Bob Property

    Bob Property New Member

    I found that a reasonable proportion queried the VAT and tried to pay cash for a discount. It didn't help that we quoted ex-VAT prices, when I think we should have quoted VAT inclusive prices to domestic customers. e.g instead of saying £30 plus VAT we should have just said £35.
    The rich customers sometimes have the cash and are experienced negotiators. (That reminds me - someone in Hale still owes me money)
    Which set up do you use for the plastic?
     
  8. crash

    crash Member

    Which set up do you use for the plastic?

    There ios a company called worldpay who are an internet card processor really but they also have a virtul terminal where you can run cards through (Like ou would if you had a shop)

    I have designed a form for customers to sign as agreeing the amount and that I keep with their invoice - So if there are any questions raised by worldpay regarding fraud then I can say i have the customers signature etc etc

    Regards

    Mark
     
  9. For VAT purposes you are registered as an individual, it doesn't matter if your are Ltd or a PLC, there is one name on the VAT registration and any businesses which you own or run are combined for VAT registration purposes.

    Even someone like British Gas, it isn't British Gas that's registered for VAT it will be a single named person (usually the Financial Director) who will be registered as the representative of British Gas PLC. Obviously this carries certain risks for the individual, which is generally why the Financial director is paid an enormous salary.

    I run two businesses, Bathroom Installation and stone importing, as far as Customs and Excise are concerned the turnovers are combined as one business under my name.

    I'm also registered for plastic and Use HSBC card services (my bank) I pay 1.9% on Visa/Mastercard credit cards.
    18p per transaction for Maestro, and I won't accept American Express or Diners club as the commission is obscene.
     
  10. The most difficult point to deal with VAT is when you're on the borderline, or anywhere upto £100K turnover, it seems to cost you more money than you'll ever get back.

    I still get asked to take cash, which I'll happily do but they still get charged VAT, I can no longer afford the risks.

    I very rarely get asked to to take cash for my stone or marble, it's as though people expect to pay it on an item, that suits me fine.

    Although I import all the stone VAT free as it's from EU countries and there's no record of it entering the country. The VAT system is open to enourmous fraud due to the free trade between EU countries.
     
  11. Bob Property

    Bob Property New Member

    For VAT purposes you are registered as an individual,
    it doesn't matter if your are Ltd or a PLC, there is
    one name on the VAT registration and any businesses
    which you own or run are combined for VAT
    registration purposes.

    Even someone like British Gas, it isn't British Gas
    that's registered for VAT it will be a single named
    person (usually the Financial Director) who will be
    registered as the representative of British Gas PLC.
    Obviously this carries certain risks for the
    individual, which is generally why the Financial
    director is paid an enormous salary.

    Sorry to disagree with you Mudster but a Limited Co is a separate legal entity so can be registered for VAT in its own right. That's what I used to do. I am not VAT reg, neither is one of my companies (it's not trading now anyway). The other company was VAT reg. I de-registered at the start of the year. (You will find that BG is about 30 plc's most of which are VAT reg.) This is why having 2 ltd companies (or 1 ltd co and one other business) splitting the work winds up the VAT man. If you can justify the difference, fine. If the VAT man thinks you are doing it just to avoid VAT then he gets upset and is allowed to add the two back together. (not nice :()
     
  12. I don't use an accountat, was advised above by Customs and excise earlier this year. Of course they could have advised me incorrectly but it's worth checking.
     
  13. Actually I might not have explained it clearly enough, even a LTD company, the Ltd company isn't vat registered as an entity in its own right, there will be a person who represtents the company and is VAT registered on behalf of the company. C&E require this for legal accountability, or so I was told.

    I'll ask the wife shes currently studying for her chartered accountant qualifications.
     
  14. Bob Property

    Bob Property New Member

    ... the Ltd company isn't vat
    registered as an entity in its own right ...

    I can assure you mine was. They (C&E) want a contact name as the person responsible for doing the VAT returns etc. but that legally must be the responsibility of the directors and company secretary anyway. They could obviously direct someone to do it on their behalf, like their accountant for instance.
     
  15. I think we're saying the same thing but in a different way but I'll still check out of curiosity.
     


  16. Although I import all the stone VAT free as it's from
    EU countries and there's no record of it entering the
    country. The VAT system is open to enourmous fraud
    due to the free trade between EU countries.

    As a Qualified Accountant, I thought I would chip in here...

    Large companies have to declare their imports from the EC, right down to the detail of kg's, product code, country of origin, suppliers Vat number etc...

    "The Intrastat Assimilation threshold for the calendar year of 2005 is being kept at £221,000", so that is why you don't have the nightmare of filling in the returns.

    As the import is vat free, but your sales are vatable you end up collecting vat for the taxman.

    As for VAT liability, it is the Company that is liable, but the Directors are the one's that go to jail.
     
  17. londonplumber

    londonplumber New Member

    Hi Bigplumber

    Got the same problem - I don't want to register for VAT as it make my bills "look" bigger and that makes my clients look more angry. Also hard to compete with quotes etc. unless it's commercial work.

    I use an accountant would recommend it to anyone they cost £600 or so a year but boy are they worth it.

    Does not seem like we can do much about it, i'll be registering soon.
     
  18. bathstyle

    bathstyle Active Member

    Remember they check your turnover on a rolling basis so you can just do loads of cash work towards the end of the tax year to keep the turnover down.

    I found this out the hard way, I had two months work booked in all quotes were done before I was VAT registered so I had to pay the VAT out of my profit!! :(
     
  19. Bigplumber

    Bigplumber New Member

    When had to regigter there was a 3 month garce period for work quoted proir to vat. Maybe worth looking back at this bstyle as you can back claim.
     


  20. Although I import all the stone VAT free as it's
    from
    EU countries and there's no record of it entering
    the
    country. The VAT system is open to enourmous fraud
    due to the free trade between EU countries.

    As a Qualified Accountant, I thought I would chip in
    here...

    Large companies have to declare their imports from
    the EC, right down to the detail of kg's, product
    code, country of origin, suppliers Vat number etc...


    "The Intrastat Assimilation threshold for the
    calendar year of 2005 is being kept at £221,000", so
    that is why you don't have the nightmare of filling
    in the returns.

    As the import is vat free, but your sales are vatable
    you end up collecting vat for the taxman.

    As for VAT liability, it is the Company that is
    liable, but the Directors are the one's that go to
    jail.

    Thanks for that, that explains a lot, but basically when you VAT register, even as a company, you put forward someones name as the person Legally responsible, that's as I understood it.

    Re the imports, I'm currently at just under £100,000 from the EU, but like you say I collect VAT for the taxman on that.

    Is the intrastat threshold just relevant to EU imports or is it all imports into the UK? In the new year I'll be importing from Turkey and by the end of next year I'll be close to that threshold figure. I'll be paying VAT on the turkish imports so are these dealt with on a seperate basis or is it all lumped together?
     

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