Vat

Do any of you have problems with doing commercial work and not being vat registered ? I'm not currently vat registered and do quite a bit of commercial work but am thinking about becoming vat registered as when I do some quotes they kind of look at you to say we can't claim back our vat off you.

 

Im in the same boat as you. I find sometimes I get the 'look'.

 

Do you both supply the materials or just labour?

 

Bit of both really daz. I won a job last year as I was cheaper than the rest but I priced as normal and everyone else must of been greedy as it was a prestige car dealership. I was 5k cheaper. I also work for 2 companies that supply and I just fit but even labours vatable isn't it? From what I've read. Just worries me as hmrc pay out the difference and it works both ways so I have to pay them.

 

It does mean you can claim back the VAT on tools, diesel,vans, materials, workwear, consumables, The companies you work for that supply shouldn't mind you charging the extra for VAT as they will be able to claim it back, I think it looks more professional supplying a VAT invoice. The only downside is if you do a lot of work for the public labour only.

 

50/50

I sub for a mate and do my own work. Most of my own work is small domestic work with one or two whole houses a month.

 

Have a look here.. http://www.hmrc.gov.uk/budget2013/indirect-taxes.htm

 

You could try the flat rate scheme where you don't claim back on things you buy and only pay a percentage back on what you charge.
When I was on it I paid ten percent back. worked well for me at the time

 

So you still charge 20% though ? And is the company able to claim back the full vat even though you only claim 10%

 

http://www.hmrc.gov.uk/vat/start/schemes/flat-rate.htm
Yep pretty much. You should speak to an accountant first as it may not be suitable it all depends on your turnover

 

yes, but you don't claim it, you pay the fixed rate and can not claim anything back
So, if say the job is say £1000 + vat=£1200, at ten %you would pay the VAT man£120. but can claim nowt back.

If not fixed rate, same job, £1000 + VAT= £1200, if materials cost £500+ VAT= £600, you would claim back the £100, so effectively would pay VAT of £100.(on the profit of £500) Also you can claim back the VAT on diesel and all other business related vatable items.
So as I said b4 if all your customers are VAT registered and can claim back, it wont matter to them that you charge VAT, and you would be better off.

 

Disagree only on the fact that you are never better off as you will always pay the vat man

 

Same £1000 job, not registered, materials £500 +VAT=£600 = £400 profit.
Vat register £500 profit.
Does depend on the type of work you do though, compulsory over £79k turnover anyway

 

Thats interesting so if Ive understood this right, on the flat rate vat scheme you would charge 20% standard vat on all invoices, but you pay back on your vat returns 14.5% but you cant claim anything back, so in essence you are making 5.5% extra each quarter in a lump sum, is that the basic gist of it?

 

You should come under General building or construction services @ 9.5%​

 

If you're working for commercial customers who can reclaim the VAT, then yes I suppose, if private customers who can't reclaim VAT, and you have to be competitive with non VAT competition then no, because you still have to pay that percentage.

 

Bulk of my work is subbing to a national so materials might be/would probably less than 10% of my turnover until my own work picked up to the point I was doing a fair bit of it.

 

what i'm saying is that you will always owe the vat man, unless you buy a van, but then that's only in a 1/4

 

90% of my work is to the commercial new build market, so the flat rate vat scheme would actually be a good idea and an easy way of getting used to the whole vat registered thing.

 

I'd keep away from it unless 90% of your customers are vatable