Dont get caught short like me....!!

[sythai]

Hi Chaps...

Just thought I'd share this with you so you don't get caught out like me, owing the VAT man a fair bit of dosh !!

Have been keeping an eye on my my gross turnover, basing it on my April to April tax year.

As soon as I was near to the VAT threshold I was going to have a word with my accountant to see what I need to do. And start changing my pricing/ book keeping etc.

But found out today on the off chance that VAT is based on the last 12 months turnover not April to April. So without knowing I've gone over that limit back in August.

Went in to see my accountant today, not best pleased wondering why he hadn't forewarned me of this.... now for the last 3 months worth of turnover I've got to pay 20% out my own pocket, and have got quite a few things coming up which I've already priced without VAT, so will also be doing these jobs at a 20% lose.

Grrrrrr - there goes my holiday fund :32:

Anyone else had a similar situation ?

 

[netblindpaul]

Sue your accountant that is what you pay him for so he should have warned you.

 

[sythai]

Sue your accountant that is what you pay him for so he should have warned you.

Would be nice if I could..... definitely looking for another one now

 

[netblindpaul]

He should at least pick up the bill for his mess up.

 

[Darkwood]

Yes agree kinda complicated in your set up because you would have been required to show VAT on your bills etc with your VAT registration no' had you done this you could have claimed back on the materials, you will have to discuss this with the VAT man and your accountant for a solution, they are keen when owed money but also i find they will assist you where they can to find a solution for you, just dont show any negative tones or they wont be interested in helping.

 

[Darkwood]

P.S. the pre-priced jobs youve yet to do wont be a total loss as once registered you can claim back on materials, fuel etc etc... your only loss will be VAT charged to your labour so jobs heavy in labour and light on materials will sting a bit until you start you VAT inclusive pricing.

 

[durhamspark]

Not 100% sure but I think you can go back to your customers during that 3 month period and ask for the VAT.

No good if they are domestic customers but if they are VAT registered themselves it will benefit them as you can reprice and they can save the vat on materials which they have already paid but could not claim back as you hadn't shown it on the invoice. The vat on your labour doesn't affect them as they claim it back anyway.

Have you looked at the flat rate scheme for vat? not many accountants are too aware of it but it certainly has its benefits and makes the vat returns so much easier.

 

[sythai]

Right pain in the @rse this....... thanks for your advice there anyway chaps. Whatever way I look at it I'm still a good few grand out of pocket.

 

[topquark]

Also keep in mind that you'll have to do quarterly returns for VAT, if you miss one you'll be "assessed" and they'll bill you for the assessed amount. So it may change the way you do your accounts (in order to cater for the quarterly inputs/outputs). You'll need to be able to produce quarterly figures for the inputs and outputs, the VAT amount and the amount it's based on (also for any imports/exports with EU countries if you do any of that).

 

[netblindpaul]

My accountant says flat rate is not good for materials heavy businesses.
Which most of us area, unless perhaps you are only an I&T company.
The accountant should help you with the VAT returns ours does in the price if we need it.
AFAIK, you are entitled to go back 3m for the VAT also as Durham says.
YOu can now also go back and reclaim the VAT on the kit that you have bought from the time you need to be reg'd from, fuel, phone, materials, etc.
As long as you have the VAT returns.
We went VAT Reg'd from day 1 so I don't know, for us we felt with the advice of our accountant it was worthwhile as the %age of domestic is so small.
Probably >99% of our business is b2b.

 

[Des 56]

I have managed to stay away from vat for the last 26 years

The last time I got scared, the vat threshold apllied if you were over for any quarter, so good scrutiny was needed in that respect

I think the advise durham gave was correct and the way forward

Once during a scare period I had advise that all invoices issued to cover back to the registration date could be remade and re issued
One thing that would be a concern,how long will they backdate registration ?
If it can be a few years that could cause you real concern
Anyone know?

Is this registration voluntary or have they caught up with you ?

If its simply that the threshold has been reached then perhaps a bit of books juggling will keep it under the carpet

I have overshot the threshold in the past and waited on the vatman but nothing ever came of it

 

[Cyberprog]

Just remember to claim the VAT back on everything you possibly can, for as far back as you can. I.e. everything currently on your van can be claimed for, it's also worth having a word with the business customers you have to advise that you'll be adding the VAT on top, from a technical standpoint if they're VAT registered it shouldn't make any difference to them wether the price they're paying you is inclusive or exclusive of vat if it's not been paid or invoiced yet.
This web page may be of some use also: HM Revenue & Customs: Purchases made before VAT registration
You can also reclaim VAT on any services you've paid for in the last 6 months, as long as you still own the equipment or benefit from it iirc.
And yes, it's a rolling 12-month thing for VAT, something a lot of people don't realise!

 

[Rampage]

He should at least pick up the bill for his mess up.

lol
As if that's going to happen!
You are ultimately responsible for your accounts, not anyone you pay to do them for you.

 

[netblindpaul]

My accountant has already told me that if things are filed late or he mucks up etc. he will foot the bill for it, also I actually believe him.
He has helped me out a LOT and has come up with some very good advice and practical assistance.
He is always spot on with his advice, he came recommended from someone I know who had a £6figure tax bill from HMRC, that he turned into a refund for them, so go figure!
Yes you are responsible for your accounts, however, you are employing a competent person to undertake the work for you, this is the same with any profession.
If you employ a professional who is a member of a recognised professional institute and has been independently verified, then they should be competent if they are not then you can have recourse against them or their PI insurance, which to practice as an accountant is a compulsory requirement.