is being VAT reg worth the hassle?

[RockCeramics]

:20:Recently i got a letter from one of my building contractor asking for my VAT reg number.
on my letter heads show im not VAT reg , but this got me thinking
"would it be best for me to become registered?"
my turnover has not reached the required point. So at the moment i feel best im not.
This will be my first full yr as a sole trader so i need an accounant and chat with them about this.

what are your thoughts on this?
would you become VAT reg to get the perks and prepared for the paper work?

 

[BTB]

It has it's Pro's and Con's

We are VAT registered, but do a lot of commercial building work so it is good for us.

If the majority of your work is for private clients, you may find that you loose a few jobs because of the increase in price.

As far as administration goes, it's very easy using a basic spreadsheet and setting aside an hour or so each week to enter the figures.

 

[Colour Republic]

Depends on you turnover really to see if it's worth it and if you supply goods to your customers, yes materials are cheaper but you are also more expensive to your customer as labour charges will incure vat

 

[RockCeramics]

thanks
That is 1 point i thought about the increase of pricing
being a small trader this is 1 of my advantages against a bigger company
I knew 1 company that put his vat on a price but was not registered so when they became VAT reg there prices never changed and 1 company caught a wiff of this and removed them from there books.
just cos of that.

 

[Aston]

hi rock ceramics

theres a reason for there being a vat threshhold....if you over it, its worth it, if your not, its not....lol and that can be a good thing in some cases mate..

turnover doesnt tell the real story..your profit is the key to your performance. so i'd say, where possible, legally sail under the radar until theres a point where you have no choice...theres no harm in being a small efficient 1 man 2 man, 3 man team...ive seen more switched on low profile people make more money over the years than the ones who made the jump too early....they were ill advised, and in the end become too expensive because of the vat and priced themselves out of their own market!!!

grumpy is your man for this kinda thing..

just to clarify, there will be loads of people on here who are bathroom specialists, builders and commercial tilers so you will obviously benefit from being vat registered, my example above was to people below or thereabout the vat threshhold :0) thanks...

all the best
ed

 

[mikethetile]

well said aston

a lot of businesses talk about turnover and make statements about the value of work done

when you press about profit they dont know the figures off hand because they have become so impressed with turnover they have forgotten the bottom line

every job needs to turn a profit to remain in business , if you dont know your margins or profit made, how do you know your making money

you could well be just turning over large amounts of cash and not making a single penny

 

[grumpygrouter]

I formed a limited company so I could tile without being VAT registered. My sole trader accounting business IS vat registered so if I traded as a sole trader for tiling too I would have need to be applying VAT to that also. In your position I would not go down the VAT road unless most of your work comes from commercial sources and not domestic.

 

[Colour Republic]

Sorry grumpy? you have a limited company and a sole trader set up? I take it both businesses do different things?

 

[grumpygrouter]

Sorry grumpy? you have a limited company and a sole trader set up? I take it both businesses do different things?

Indeed they do. Sole trader is my accounting services business, ltd. co. is for my tiling.

 

[albyshellshear]

When i had the bakery VAT was a godsend as eveything we sold was zero rated so every quarter i would get a payout from them, when i start the tiling i think like aston said i would sail under the radar untill the time came I was earning good money, i am under no ilusions that it will take time, but dont run until you can walk.

 

[Daveyboy]

If your clients are mostly domestic, avoid becoming VAT registered as long as you can...my turnover hit the threshold and I had no choice but to register..since then, I have lost countless number of domestic jobs because my prices became 17.5% higher overnight (most of my work is labour)..even with dropping my prices, I still lose work because of the VAT..as a result, my turnover and profit are significantly down since registering despite being fully booked up with work..luckily I'm now pulling in more commercial work and domestic work that non registered trades wouldn't do, so things are looking up...

 

[The Legend; Phil Hobson RIP]

Vat regs. might have changed since I was Vat registered (25yrs ago) It suited me at the time. All my work was new builds, zero rated, at the end of every quarter I got the Vat back on my materials. But when my work changed to mostly domestics, I wanted to de-register. They made it very hard for me. Yet when when I was claiming Vat back they kept trying to get to me to de-register. Until you have to, I would give it a miss, or rather until it suits you to become an unpaid Tax collector. Good luck.

 

[diamondtiling]

Vat regs. might have changed since I was Vat registered (25yrs ago) It suited me at the time. All my work was new builds, zero rated, at the end of every quarter I got the Vat back on my materials. But when my work changed to mostly domestics, I wanted to de-register. They made it very hard for me. Yet when when I was claiming Vat back they kept trying to get to me to de-register. Until you have to, I would give it a miss, or rather until it suits you to become an unpaid Tax collector. Good luck.

They are still at it Phil, I have been Vat registered for 10 years and applied to de-register 3 months ago due to less commercial work in general. They have refused me up to date, I dont owe them anything and I have a mountain of paper work to fill in for them.
The trouble is I have to deal with an office in Wolverhampton and another in Milton keynes and neither of them communicate with each other. I fill one form in and off it goes only for another letter arriving from a different office asking for the same information.

:20:

 

[mikethetile]

They are still at it Phil, I have been Vat registered for 10 years and applied to de-register 3 months ago due to less commercial work in general. They have refused me up to date, I dont owe them anything and I have a mountain of paper work to fill in for them.
The trouble is I have to deal with an office in Wolverhampton and another in Milton keynes and neither of them communicate with each other. I fill one form in and off it goes only for another letter arriving from a different office asking for the same information.

:20:

mk hmrc are a nightmare to deal with Dom

its run by muppets,,,,,,,,,,,what a shambles

i had bailiffs on the door with a warrent to enter and list goods unless i paid there and then

i refused them entry and stood on the drive and rang the tax office while they rang the police to enforce the warrant

the tax office agreed to call them off if i took a cheque into them that afternoon, i had untill 4pm and the bailiffs were going to remain parked across my drive and i would have to pay for their time

after 4pm they were going to execute the warrant

i went in alright, no cheque, just my books and statements

i gave them hell

i was owed a rebate from two years previous and still hadnt recieved it

funny thing was it was for the same amount as they were demanding

i got my rebate

no apology just a rebate less a hundred pound fine for not paying the tax
that was due

AAAAAAAAAAAAArgh,,,,,,,,,,,, i was getting a rebate on tax paid

this is still ongoing and will end up in court

 

[doug boardley]

I really really really would hate the paperwork!

 

[CBTC]

On VAT - a few of you write as if theres a choice - if you go over the threshold - or look like you will in the tax year - it's mandatory to register, not a user choice.
VAT Paperwork: better than it used to be. Percentage scheme allows simple turnover calculation and annual accounting scheme is best for most tiler size businesses.

Grumpy - although not excessive, the LTD Co. status causes more paper work and cost than VAT surely - with compliance / Co. House requirements? - and is a choice, unlike VAT. Most LTD co.s would surley only be that if of suffcient size to require VAT reg anyway. Your territory for sure, but perhaps you could fill out the info a bit more, cheers.

 

[grumpygrouter]

On VAT - a few of you write as if theres a choice - if you go over the threshold - or look like you will in the tax year - it's mandatory to register, not a user choice.
VAT Paperwork: better than it used to be. Percentage scheme allows simple turnover calculation and annual accounting scheme is best for most tiler size businesses.

Grumpy - although not excessive, the LTD Co. status causes more paper work and cost than VAT surely - with compliance / Co. House requirements? - and is a choice, unlike VAT. Most LTD co.s would surley only be that if of suffcient size to require VAT reg anyway. Your territory for sure, but perhaps you could fill out the info a bit more, cheers.

Not sure exactly what you are wanting me to fill out here CBTC. The original post was about vat registration and would it be worthwhile for the poster to consider. My response was to illustrate that I avoided being vat registered for my tiling by becoming a ltd. co. as my customer base is domestic so not charging VAT keeps my price down.

Until traders reach the VAT threshold, then being registered is a choice, and that depends entirley on the business's circumstances. Being a Limited Company is not really anything to do with "size" or turnover of a business, but how much protection the shareholders/directors desire and seem to think they have by being limited. There is more paperwork for statutory requirements but for book keeping etc, it is exactly the same really.

 

[RockCeramics]

Thanks for all your input on this one i`ll probally leave the vat reg for now.

 

[Dan]

Wise move I think Rock. You're 17.5% cheaper than your competitor who is VAT registered whilst you're not. Orrrr, they knock down their prices a bit and don't profit as much as you on like-for-like jobs.