Vat

[DNgroundworks]

Hi all, Just looking for a bit of advice as what to do about going vat registered, as some people may know ive only been set up around 2 years and i currentley trade without having to add vat on total price of the job.

All im thinking is that if things carry on the way they are going then by next april id have nearly doubled the threshold and by going VAT registered it will put my price's up by 15%, which in turn will make it less likely for me to get the work in the first place?

Should i set up a seperate groundworks business that is vat regiseterd and just run commercial work through it?

Any help gratefully received

Before anyone says " go see an accountant" im going on friday just wondered what you guys would do.

[Rich H]

The VAT threshold is determined on the turnover of all of your businesses combined, so it's no help to set up a another company.

Don't register until you have to.

Don't forget that you're already charging VAT on your materials, as you're unable to claim it back, so all that happens when you get registered is that you will be also charging VAT on your labour.

[msh paving]

if you set up a separate buisness it will have to be a ltd company or partnership as sole trader vat is on turnover as a individual.if you are buying materials and have plant you will be better off vat able,as you are getting 15% to cover vat on materials and tools etc.To run a ltd company and a sole trade will be a book keeping nightmare as the ltd company wont need to be vatable till it turns over 60k if that is the vat limit not shure what it is now
MSH

[DNgroundworks]

Orite, i thought it was total sale price of the job regardless wether ive paid vat on the materials already?

[DNgroundworks]

its 64k i think msh - well thats another avenue ill have to think about as i have a 1.5 tonne jcb that ill be paying for in about a month and also a mini crusher.

The problem/question - is being 15% dearer such a big deal does anyone struggle with this?

Also im negotiating some minor contracts with LA'S and apparentley they would prefer it if i was trading as a LTD company - how do you guys find being LTD affects you?

[msh paving]

if you are buying plant you claim all the vat back you pay even if its on credit,most people accept vat , but theres ways and means...... ??? .i would not be any other than vat reg. theres £10 vat on every tank of fuel in my 7.5 ton truck,mobile phone bills,work clothes the list goes on and on,im not ltd myself never felt the need but it may happen next year,can't see why local councill need ltd buisness.never bother our area MSH

[Rich H]

Been on VAT for 5 years now and never had a customer say they wouldn't go with me over someone else not VAT registered. TBH 64k is only 5k a month which is not a lot of landscaping!

[DNgroundworks]

True Rich H - hence my problem! off to my accountants tomorow

[dig dug dan]

I struggled for years to stay below the threshold, and like you dn, i was worried about losing customers. If anything, i lost some of the smaller jobs, but won the larger ones.
I thought about going ltd etc, but not worth it.
best thing i ever did. they say you will get inspected after about a year, and 6 years on, i am still waiting for an inspection!
You can claim back three years of vat on machinery purchases, and if you are paying for anything on finance, the vat element is reclaimable, as is vat on fuel etc.
I found i was quoting fencing jobs for house builders and not winning them as i was charging them the vat on the materials i was having to pay. once i went vat registered, i was ok as the house builder could claim back the vat on my invoice, hence cheaper!
One bit of advice. I have a spreadsheet set up that i record all incomings into my account and outgoings, with seperate workings for how much vat i owe at the end of the quarter. that way, i can see how much funds are available, and how much i need to pay the vat bill. always make sure you set aside the vat omey for the vat man!