Mainly domestic; are you VAT registered?

[BillyTheSparks]

I know this because when I was a Student, a friend of mine was presented with the documents for a trust fund that he never knew he had, and upon sending them into the bank got a letter back stating that the trust fund had been closed out in 1993 and all monies withdrawn.....bummer as he thought he was due a few thousand..
Apparently his old granddad had started the fund and was putting in money for years, he had named one of the fellows Aunts as an additional signatory (to take over running the trust fund until the boy reached age 18 if anything happened to him) and she had went in, closed it, drew out all the money and went on an allmighty pss up and Holiday bender while the boy was still in his early years at high school...he never found out until 2000 a whole seven years after it was arsed...and he was a skint student..

Whats that got to do with it?

 

[LukeD]

will you customers wish to pay the VAT?
I know many that will close the door on ANYONE trying to charge them VAT. I also know someone who had a terrible time with the VAT man,. they wanted his blood and the blood from his children,. they are evil to the point of barbaric . Unless you can safely earn 40% over the threshold i would give it a wide birth. I stay well away from turning over the the thresh hold. But I am lucky as most of my "materials" belong to the clients . I just fit etc .

 

[grantr37]

What rubbish!
So you register for VAT and immediately become liable for VAT before you hit the threshold?

I wonder why I bother posting links!

NO you are obviously not reading this properly, you dont become liable until you hit the threshold, but when you do hit the threshold and register, you owe money in VAT for the earlier part of the year that you register, ie you dont just pay VAT on money from after the date of registering, you owe for that whole TAX year....so you have to find money to cover the VAT for the work you did earlier that year, and as you never collected the VAT at the time of earning/collecting those monies from the customers/clients, you have to give it to the Taxman from your own funds...

 

[LukeD]

In terms of taking money that you have put into savings/a trust fund for your childerns future, they will seize this money if you owe tax as even though it is in the childs name, it is not legally classed as theirs until they reach their 18th birthday, and it is classed as YOUR money sitting with a custodian (Trustee/Lawyer/Bank/Building Society) for a future legally processed gift/endowment to a child/young adult, in which case they assume that you are trying to hide your cash by putting it into the childrens account/Bonds....they see this as trying to avoid paying debts to them (or assumed debts to them) by moving money around and consider the possibility that you may manage to retrieve that money in the future, which with many of these trusts can be done, I know this because when I was a Student, a friend of mine was presented with the documents for a trust fund that he never knew he had, and upon sending them into the bank got a letter back stating that the trust fund had been closed out in 1993 and all monies withdrawn.....bummer as he thought he was due a few thousand..
Apparently his old granddad had started the fund and was putting in money for years, he had named one of the fellows Aunts as an additional signatory (to take over running the trust fund until the boy reached age 18 if anything happened to him) and she had went in, closed it, drew out all the money and went on an allmighty pss up and Holiday bender while the boy was still in his early years at high school...he never found out until 2000 a whole seven years after it was arsed...and he was a skint student..

Good for her !!

 

[IQ Electrical]

and I thought this was about VAT???

It was, post 11 is quite good and contains a link with all we need to know!

 

[grantr37]

Whats that got to do with it?

It has to do with the fact that I have seen that the money in a childrens trust fund can be available to the parents/relatives who may be seen as trying to hide it there from the tax man, thats what it has got to do with...

 

[IQ Electrical]

NO you are obviously not reading this properly, you dont become liable until you hit the threshold, but when you do hit the threshold and register, you owe money in VAT for the earlier part of the year that you register, ie you dont just pay VAT on money from after the date of registering, you owe for that whole TAX year....so you have to find money to cover the VAT for the work you did earlier that year, and as you never collected the VAT at the time of earning/collecting those monies from the customers/clients, you have to give it to the Taxman from your own funds...

Absolute rubbish!!! Read the information in the link and stop posting such drivel please!

 

[BillyTheSparks]

It has to do with the fact that I have seen that the money in a childrens trust fund can be available to the parents/relatives who may be seen as trying to hide it there from the tax man, thats what it has got to do with...

Oh, I get you now.

 

[grantr37]

and I thought this was about VAT???

I was adding to my remarks about the VAT Man being able to take your house and even end up taking your kids trust fund money, as they see it as hiding your money in your childrens name...

 

[grantr37]

I never want to get on the wrong side of the Tax man, I'd rather overpay than have them chasing me for money, I just read that they can go back 20 years now, and I think it used to be 7 years, and I also read in todays paper that they are going to be coming down on all kinds of tradesmen and starting investigations into people they think are working cash in hand (doing homers) so no doubt they will start pestering everybody who is in the construction trades....

 

[IQ Electrical]

I never want to get on the wrong side of the Tax man, I'd rather overpay than have them chasing me for money, I just read that they can go back 20 years now, and I think it used to be 7 years, and I also read in todays paper that they are going to be coming down on all kinds of tradesmen and starting investigations into people they think are working cash in hand (doing homers) so no doubt they will start pestering everybody who is in the construction trades....

They can't 'come down hard' if you pay what you owe!

Is there some vendetta going on between you and Revenue & Customs?

I'll say what I always say on these forums, I just want to stick to the facts and not opinion and myth.

What you posted regarding registering for VAT and then having to pay for the previous 12 months is absolutely not true, why don't you read the information and admit you were wrong, for the benefit of everyone reading this thread in the future?

Do you believe that once you hit the high rate of income tax that you are then taxed at 40% on everything you earned in the previous 12 months?
It's a similar principle and just as silly!

 

[Paul.M]

Ive just read the hmrc website and the threshold is £68k. I think what grant is trying to say is if you don't register and don't charge vat from the start of the financial year but go over the threshold in the last couple of months of that year they will charge for that full year and not just the 2 months that you are over. Could be very costly. But on the flip side you can claim the vat that you have paid in that financial year to offset your bill.

The hmrc website is not as easy to read as they say it is but a very good link and at the end of the day we can call them and ask.

 

[IQ Electrical]

The threshold is £70,000.

I've registered 2 businesses for VAT as the threshold was in sight and can guarantee you that they do not then say 'right, you owe VAT on your last 12 months sales!'

Just think about it and read the information again!

Then read the first 'paragraph' of post 17.

 

[Welchyboy]

I asked my brother about this he is a chartered accountant and he said you register for vat before you hit £70,000 then you must start charging 20% on labour but you cant put it as VAT on your invoice till you get a vat number, then you just save it as you will have to pay this money over from the day you register, they wont bill you for the whole year or go back on your invoicing unless they find you have been earning over £70,000 before you register, oh and its not £ 70,000 per account year its £70,000 over any 12 consecutive months so dont get caught out!!!

 

[IQ Electrical]

I asked my brother about this he is a chartered accountant and he said you register for vat before you hit £70,000 then you must start charging 20% on labour but you cant put it as VAT on your invoice till you get a vat number, then you just save it as you will have to pay this money over from the day you register, they wont bill you for the whole year or go back on your invoicing unless they find you have been earning over £70,000 before you register, oh and its not £ 70,000 per account year its £70,000 over any 12 consecutive months so dont get caught out!!!

Quod Erat Demonstrandum.

 

[grantr37]

Got the Tax mans business card here from office, am going to phone him tomorrow and ask about what the peculiarities of the current VAT system are, he will put me right...

 

[baldelectrician]

I'm not busy enough to have to worry about vat as my turnover would have to more than double for me to have to worry about it.

What I encourage is to get the client to go to the wholesaler and but the materials and I provide labour. I do this if the materials are more than a few hundred.
It helps as the client sees how dear the materials have now become.

It is especially good with showers as if the item goes ---- up then the client bought it and not you (and they are liable to deal with any repair issues and you didn't supply it)

 

[malcolmsanford]

I'm not busy enough to have to worry about vat as my turnover would have to more than double for me to have to worry about it.

What I encourage is to get the client to go to the wholesaler and but the materials and I provide labour. I do this if the materials are more than a few hundred.
It helps as the client sees how dear the materials have now become.

It is especially good with showers as if the item goes ---- up then the client bought it and not you (and they are liable to deal with any repair issues and you didn't supply it)

Good theory but is it really. What happens when you send the customer to buy a 17th edition board and the wholesalers is 75 pounds and they see that a B & Q one is 55 pound ............and buy that.

So your client is quite happy to schlep all the way down to an wholesaler for you and buy the material, how do they manage lengths of oval tubing in the mini.

You obviously also don't work on a mark up on material, which as always been a standard practice and can in fact cover quite a bit of cost on travel, and paperwork which quite often you don't allow for.

I have to admit I'm not a great lover of clients buying thier own stuff, if it does fail before the year out, invaribly they will call you and that starts a whole new ball game of I'm not covering this, or not covering that, with thier reply that it failed becasue of the way you installed it, MK told me that, it's really not worth the hassle.

If a customer insisted on purchasing their own material, then I would add to my quote that I will not be held responsible if that fails, and make them sign it. You can not do that if the material you suggest the client buys fails, as they will say you recommended it, it's a real minefield IMO

 

[IQ Electrical]

I agree with Malcolm, material markup is essential when we're squeezed tight on labour margins etc.
I can't imagine saying 'here's a shopping list' to a client, it's rather unprofessional too.

Don't be afraid of VAT, just learn the facts and some of the advantages to your business.

 

[baldelectrician]

I get the client to buy the stuff if the materials cost is high

I buy my own consumer units and guarantee them, if the client wants me to fit one they have bought I do point out if there are any problems then they are responsible

I offer the client what they want- I had a chap want a 14 way staight rcbo consumer unit (hager) and he said he would order through tlc, saves me at least £350 on my turnover. I will have new tails and other bits and charge accordingly

Don't get me wrong- I prefer to source the stuff myself and fit it, but flexability is the name of the game these days