Vat Yes or No

This is not another Brexit vote just want to know the forums view, on going over the Vat threshold Good or Bad.With a 50/50 split of commercial private maintenance on turnover, not sure what to do, concerned I will lose some of my private clients. With the 20% increase, I've looked into flat rate scheme but see the goverment are chasing this to 14.5% in April.Just wondering if it's all worth it, the extra admin will be levelled out with us all having to do the quarterly returns if the government get their way.Any help will be appreciated just a short note we don't do landscaping mainly maintenance with occasional border revamps.So will be limited purchasing ahead.

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  • PRO

    Big yes from me - didn't lose many domestic customers over it, many congratulated on doing well. Most expect to pay vat anyway.

    Admin no big deal if you use something like quickbooks etc.

  • PRO

    We went VAT registered last Jan and it was something we should have done ages ago. I think only a handful of customers directly left as a result and we gave nearly all a full 20% increase. I found the best thing I did was get my other half who does some admin for me to send out the price increase letters as she doesn't have first hand knowledge of the customers and just objectively applied the increases. I'm still amazed what people pay. I don't find it that much extra admin as we use Sage accounts and is just a few buttons to get the figures. We are mostly domestic lawns with only a few commercial contracts. 

    • So was the letter just a simple due to VAT we will be increasing prices by 20% ???
      My business is mainly maintenance so the customers get a bigger hit, not the volume of customers you possibly have if you do lawn treatment.???
  • PRO

    chris, it's a nuance, but you're not increasing your prices by 20%; they are staying the same. It's just that the customer will need to pay 20% more and you are an unpaid tax collector. Your net revenue will not increase, but some of your expenses will decrease as you'll be able to claim back the vat.

    When we spoke earlier, you mentioned some customer sizes; we do mowing and lawn care and I have 2 customers similar size to the large one you mentioned; one went through the vat increase, and one has been post vat. Neither of them has mentioned vat to be of any factor to them. In fact for some customers whom run businesses from home, it's a bonus for them I think.

    • Thanks Andrew going to be a learning kerb if I run with it.
  • PRO
    Registering for VAT reduces your overheads as you claim the VAT back on equipment purchase costs and running expenses; and so on. You can offset this against the cost increase to non-VAT registered customers, so your invoice to them may not increase by the full 20% or you may try to increase your margin and profit.

  • PRO

    Its actually going to be 16.5% as a flat rate

    • Closed that loophole makes it worse
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