Accountancy question

[Guest77]

Hi all, when I first started accountant said do not go for VAT do no do this & that ECT. Why worry about being VAT registered especially at the moment VAT 20% TAX 20% so they are equal. So on start up I would not bother unless work you are doing is VAT excempt or at a less rate.
Reason is if you are doing normal private work you will be 20% more expensive & really with both percentages being equal you will get 20% against tax at end of year for all your expenses ( inc VAT you have paid out) but you won't have a VAT bill every quarter.
I am however VAT registered but I do quite a bit of new build, but even then if it is a one off new build I would not bother. Hope it makes sense & good luck

Can you clarify this point please?

 

[marc8]

To clarify
if I go to wholesaler they charge me VAT on goods if I am not VAT I still pay it, at end of year my materials bill for example is £50000 therefore I get £50000 pounds comes off the bottom line as I paid full amount & did not claim the VAT as not registered. If I am vat registered then I would have claimed 20% of the value added tax every quarter & would only have a materials bill against tax 20% less.
Also being VAT on private works I would 20% more expensive on labour as I charge VAT

 

[Rockingit]

To clarify
if I go to wholesaler they charge me VAT on goods if I am not VAT I still pay it, at end of year my materials bill for example is £50000 therefore I get £50000 pounds comes off the bottom line as I paid full amount & did not claim the VAT as not registered. If I am vat registered then I would have claimed 20% of the value added tax every quarter & would only have a materials bill against tax 20% less.
Also being VAT on private works I would 20% more expensive on labour as I charge VAT

That's one heck of a simplistic and rather naive take on it!! I think you need to find a new accountant. Have you ever considered everything else that you purchase apart from job materials?!

 

[marc8]

Hi rockingit
they asked me to clarify what I had said previously, this was just an example maybe trying to explain in text is not that easy. Example being just one small bit, do the math if you are not VAT & you pay it when you purchase something then you claim it at the end of year against your tax. Hope that makes sense & also if you are VAT & you work for homeowners you would be 20% more expensive than the guy who is not VAT because you charge it on top of your Labour.

 

[Octopus]

Hi rockingit
they asked me to clarify what I had said previously, this was just an example maybe trying to explain in text is not that easy. Example being just one small bit, do the math if you are not VAT & you pay it when you purchase something then you claim it at the end of year against your tax. Hope that makes sense & also if you are VAT & you work for homeowners you would be 20% more expensive than the guy who is not VAT because you charge it on top of your Labour.

I would recommend you consult an accountant!

 

[marc8]

Have a good one thanks this was the view of my last accountant about six years ago

 

[plugsandsparks]

I really want to stay away from domestic as much as I can, the customers I have are commercial and will not touch anyone who is not VAT reg so it was really the only way to go for me. Thread development bought a van on finance in the companies name so no problem. Bought a caddy maxi really nice drive, plenty of room and being a vw should be solid. First day trading Monday wish me luck, thanks for the advice

Good luck.. hope it goes well. FWIW, I went VAT reg and Ltd from the very first day for the reasons you give. The odd domestic I do, in theory and on average I will be 10% more expensive overall which I can easily justify. Have also done a few new builds which were zero rated anyway and being VAT reg meant that I could invoice for both materials and labour at zero VAT. I do VAT once a quarter and its a doddle, cannot understand why all the fuss.....